Explanation

Statement I is correct. India has emerged as a global leader in equity derivatives trading, particularly in equity options. As per NSE (National Stock Exchange) data and BIS reports, more than 80% of global equity index option trades were recorded on Indian exchanges in 2023. This extraordinary volume reflects the massive retail participation and growing sophistication of India’s financial markets.

Statement II is correct. India’s stock market has witnessed rapid growth in recent years, driven by increased retail participation, digital access to markets, and a surge in IPO activity. In January 2024, India’s stock market briefly overtook Hong Kong in terms of market capitalisation, making it the fourth largest stock market in the world at that point in time.

Statement III is incorrect. The claim that no regulatory body exists is factually wrong. SEBI (Securities and Exchange Board of India) is the statutory apex regulatory authority for India’s securities markets. It actively warns small investors about the risks of options trading, issues circulars and guidelines to curb mis-selling, and takes strict action against unregistered financial advisors and fraudulent schemes. SEBI has consistently cracked down on illegal advisory services to protect retail investors.

Therefore, only Statements I and II are correct.

UPSC Insight
Statement III is the planted trap — SEBI is very much an active regulatory body that warns investors and acts against unregistered advisors. Any statement claiming “no regulatory body exists” for a major financial sector in India is almost always incorrect.