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Consider the following statements : I. India accounts for a very large portion of all equity option contracts traded globally thus exhibiting a great boom. II. India's stock market has grown rapidly in the recent past even overtaking Hong Kong's at some point of time. III. There is no regulatory body either to warn the small investors about the risks of options trading or to act on unregistered financial advisors in this regard. Which of the statements given above are correct?
Explanation
**Statement I is correct.** India indeed accounts for a very large portion of global equity option contracts traded, representing a significant boom in derivatives trading in the country.
**Statement II is correct.** As of March'25, the equity market capitalization of BSE and NSE witnessed significant growth of ~7% y-o-y.[1] India's stock market has experienced rapid growth in recent years and has at times surpassed Hong Kong's market capitalization, reflecting the robust expansion of Indian equity markets.
**Statement III is incorrect.** India has SEBI (Securities and Exchange Board of India) as the regulatory body that oversees securities markets. This seminar promoted investor awareness and protection. It educated investors about the securities market, fraud prevention and smart investing practices.[2] SEBI regularly warns investors about market risks, including those related to derivatives and options trading, and has the authority to take action against unregistered financial advisors operating in violation of regulations.
Therefore, only statements I and II are correct, making option A the right answer.
Sources- [1] https://bsmedia.business-standard.com/_media/bs/data/announcements/bse/30092025/0081c928-0405-4b4a-a4b5-9629a86cca85.pdf
- [2] https://bsmedia.business-standard.com/_media/bs/data/announcements/bse/05092025/3d08fbc0-481b-43a6-b7ec-d3a38710e7df.pdf
PROVENANCE & STUDY PATTERN
Guest previewThis question masquerades as a 'Data/Trend' question but is actually solved via 'Static Logic'. While Statements I and II require awareness of financial headlines (India's F&O boom and overtaking Hong Kong), Statement III is a 'Regulatory Vacuum' trap. Recognizing that SEBI exists to regulate advisors allows you to bypass the data heavy-lifting entirely.
This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.
- Statement 1: What percentage of global exchange-traded equity option contracts (by annual traded contract volume) is accounted for by India?
- Statement 2: Has India's stock market market capitalization ever surpassed Hong Kong's market capitalization in recent years, and if so when?
- Statement 3: Is there a regulatory body in India that issues warnings to retail/small investors about the risks of options trading?
- Statement 4: Is there a regulatory body in India that can take enforcement action against unregistered financial advisors who provide options trading advice?
States NSE is India's largest exchange, offers a trading platform for derivatives (including equity derivatives) and has nationwide electronic volume.
A student could combine this with external global exchange volumes (e.g., top exchanges' derivatives volumes) to estimate India's share by comparing NSE derivatives volumes to global totals.
Notes that India has leading stock exchanges and specifies settlement cycle (T+2), implying operational maturity and standardized trading infrastructure that supports high contract volumes.
Use knowledge that mature, high-liquidity exchanges tend to generate larger option contract volumes; compare India's exchange infrastructure and typical volumes with other mature markets to judge plausibility.
Says India's percentage share in global trade is 'on the lower side', indicating India is a relatively smaller share of some global economic aggregates.
A student could use the idea that India often holds a smaller share of global economic activity to hypothesize a modest percentage share of global option contracts unless domestic derivatives activity is disproportionately large.
Provides concrete percentages of India's exports to major partners, demonstrating how India’s share metrics are presented and evaluated in international contexts.
Apply the practice of expressing national contributions as percentage shares of global or bilateral totals to compute India's share of global option contracts once volumes are obtained externally.
Shows breakdowns and percentage shares for commodity groups in exports, exemplifying use of percentage-share tables for national economic aggregates.
Students can follow the same method—obtain India's annual traded option contract count (from NSE reports) and divide by total global annual traded contracts to produce the requested percentage.
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