Why India Is Cracking Down on Its Huge Options Market: QuickTake

In just five years, India has gone from being a small player in the market for equity derivatives to the world’s largest. Around $5.5 trillion of these highly speculative instruments are now traded in Mumbai on a daily basis.

Inexperienced retail investors have been piling into a form of derivative known as equity options in search of quick returns, alarming the country’s markets watchdog, which has warned repeatedly that they face significant losses if the bets go wrong.

On the other side of the trades are large financial institutions that have more experience and resources to deploy. Regulators concerned that ...