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UPSC Prelims 2025 GS Paper 1, question 8

Topic: Economy

Q8

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?

  1. (a) I and II onlyCorrect answer
  2. (b) II and III only
  3. (c) I and III only
  4. (d) I, II and III

Solution.

Answer: (a) I and II only

  1. Statement I is correct: according to FIA and SEBI data, Indian exchanges (NSE and BSE) accounted for over 75-80% of all equity index option contracts traded globally by volume in 2023-2024.
  2. Statement II is correct: driven by domestic retail and institutional inflows, India's stock market capitalization overtook Hong Kong's in early 2024 to become the world's fourth-largest equity market.
  3. Statement III is incorrect: the Securities and Exchange Board of India (SEBI) actively regulates derivatives markets, mandates risk disclosures showing that 9 out of 10 retail F&O traders incur losses, and takes enforcement action against unregistered 'finfluencers' and financial advisors.