In the futures and options market, households are losing up to Rs 60,000 crore a year, which has led Sebi chairperson Madhabi Puri Buch to express his concerns once more that this could be a "macro issue."
"Why is that not a macro issue if Rs 50,000–60,000 crore a year is being lost on F&O when that could have been used for other productive purposes, like the next IPO round or possibly MF?" Buch stated this during a Mumbai NSE event.
Sebi has suggested stricter derivatives regulations to improve market stability and safeguard small investors in a consultation paper that was published on July 30.
Efforts against F&O addiction
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In an effort to deter regular investors from engaging in F&O trading, SEBI is putting out new regulations. Among them are the following; a weekly cap on the number of F&O contract expirations.
Raising the minimum financial requirement for F&O contracts. Requiring upfront payment of the entire option price from investors rather than just a deposit.
Sebi earlier this year proposed a number of measures, including limiting the number of multiple option contract expiries and increasing the size of options contracts, to prevent speculative trading and gambling in index derivatives.
SEBI study: 90 per cent trades in loss
Prior research by Sebi indicated that 90 per cent of the trades were losses. Additionally, on Tuesday, the capital markets regulator released a consultation paper outlining potential restrictions on the activity.
The retail derivatives market has seen a sharp rise in participation, and turnover has increased significantly from Rs 4.5 lakh crore in 2018 to Rs 140 lakh crore in 2024. Nevertheless, 90 per cent of traders are experiencing negative returns as a result of the sharp increase in losses that has coincided with this growth.
Mandetory Use of ASBA (Application Supported by Blocked Amount)
Furthermore, the regulator is looking into ways to make all qualified brokers use the Application Supported by Blocked Amount (ASBA) system and ways to make investment advisor guidelines more stringent.
