🧷 Authentic Classroom Explanation by IAS Monk

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📌 The Question:

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
(b) II and III only
(c) I and III only
(d) I, II and III

✅ Correct Answer: (a) I and II only

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🧠 Curiosity Raiser

Why is India suddenly the global epicentre of equity options trading, even more than traditional financial hubs?
Because retail participation, digital platforms, and leverage-friendly instruments converged at the same time.

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📘 Enrichment Notes (Prelims Edge)

🔹 India & Global Equity Options

• By Q1 2024, over 80%+ of global equity options volume was traded on Indian exchanges
• A decade ago, India’s share was only about 15%
• Reflects:
  • High retail participation
  • Low transaction costs
  • Easy digital access

✅ Statement I is correct

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🔹 India’s Stock Market Size

• January 2024:
  • India’s market capitalization ≈ $4.33 trillion
  • Hong Kong ≈ $4.29 trillion
• India briefly became the 4th largest stock market globally

✅ Statement II is correct

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🔹 Regulation & Investor Protection

• India has a strong regulator: SEBI
• SEBI functions include:
  • Warning small investors about derivatives risks
  • Acting against unregistered financial advisors
  • Tightening norms on options trading & speculative excess

❌ Statement III is incorrect

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🧘‍♂️ IAS Monk Whisper

When participation explodes faster than understanding, regulation becomes the silent guardian.