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?
- (a) I and II only ✓ UPSC's answer
- (b) II and III only
- (c) I and III only
- (d) I, II and III
Why the answer is (a)
• Statement I is correct: India accounts for the bulk of equity option contracts traded worldwide — NSE alone handles most global index-option volume — reflecting a retail derivatives boom.
• Statement II is correct: in January 2024 India's stock market capitalisation overtook Hong Kong's, making it the world's fourth-largest, and it has continued to grow.
• Statement III is wrong: SEBI regulates the market, has repeatedly warned that most retail F&O traders lose money (a 2024 study found about 9 in 10 lost), tightened index-option rules, and acts against unregistered 'finfluencers' and advisers.
• The concern about small investors is precisely why SEBI intervened.
• Hence I and II only, option (a).
Why the other options are wrong
- (b) II and III only
- Statement III is wrong: SEBI regulates and warns about options trading.
- (c) I and III only
- Statement III is wrong; SEBI acts against unregistered advisers.
- (d) I, II and III
- Statement III is wrong, so all three cannot be correct.
Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2025, held on 25 May 2025. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.