New Delhi, March 25 -- The Securities and Exchange Board of India's (Sebi) consultation paper, 'Enhancing Trading Convenience and Strengthening Risk Monitoring in Equity Derivatives,' issued last month, fulfils a long-standing market demand to increase the economic representativeness of its Open Interest (OI) measurement approach.

The proposal will not only help retail investors, but also institutions such as mutual funds that manage retail money. The existing method of measuring OI by adding the notional value of futures and options makes limited sense. It inadvertently leaves the door open for market risk guard-rails to be bypassed.

Regulatory independence: Indian regulators have at times adopted global best practices and at others ch...