New Delhi, March 5 -- India's derivatives market, once a powerhouse of financial activity, has gone relatively quiet in recent months, causing the stocks of capital-market-focused firms to go into freefall. This is in stark contrast to the market's peak performance, which saw it reach unprecedented heights in mid-2024.

The current contraction, however, is not merely a result of regular market cycles or global economic factors. Instead, it represents the culmination of a series of strategic regulatory measures the Securities and Exchange Board of India (Sebi) has implemented since July 2024.

The fall guys

The most immediate and visible impact of these recent regulatory changes has been on capital-market-oriented companies and exchanges ...