India's Investment Dilemma: F&O as a 'National Pastime'

SEBI's Ashwani Bhatia emphasizes the risks of making futures and options trading a 'national pastime' due to high retail investor losses. With measures like increased margin requirements and larger contract sizes, SEBI aims to safeguard investors while addressing concerns in the SME IPO sector regarding price manipulation.

India cannot afford to turn futures and options (F&O) trading into a mere 'national pastime,' warns Ashwani Bhatia, a whole-time member of SEBI. Speaking at a Morningstar event, Bhatia expressed concern over investor protests against recent SEBI measures aimed at curbing risky activities in the F&O segment.

According to a study by India's market regulator, a staggering 93% of retail trades in the F&O segment result in losses. Bhatia highlighted that it is institutional investors who primarily benefit, as retail participants move their savings into institutional pockets. He urged Indian investors to focus on 'serious investing,' rather than risky speculations.

To address these issues, SEBI has implemented measures such as increasing the minimum contract size to Rs 15 lakhs and mandating upfront options premium collection from 2025. These steps aim to foster caution and ensure that retail investors are better equipped to handle potential losses.

(With inputs from agencies.)