Retail traders should avoid taking big bets in F&O: SEBI

Mumbai: Capital markets regulator Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch has advised retail traders making big bets in futures and options (F&O) in the derivatives market to be cautious. Along with this, he has told the investors that it is important to focus on investing in stock markets with long term focus.

Introducing the Investor Risk Reduction Access (IRRA) platform, the SEBI chairperson noted that in a study conducted by SEBI last year, nine out of every 10 investors were found to have suffered losses in the derivatives market. Madhabi Puri Buch said that investors in short-term trading may suffer losses on a weekly basis.

If investors take a long-term view, they will be less likely to make a wrong investment call. He believes that there is very good potential for wealth creation over time in the long term.

The IRRA platform built by the exchanges will help investors close, cancel or withdraw existing positions in the derivatives market in case of technical glitches at the broker level.

Over the years many brokers have faced technical glitches in their online applications, especially when volumes are very high. In this situation, IRRA can help investors decide their position in time.

In the past, in the event of such technical glitches, brokers have been forced to liquidate their clients’ vertical positions to guarantee margin calls. With this he said, investors should retain control of their assets and positions, no one else should illegally take control of their assets or positions.