Sebi Wholetime Member Ashwani Bhatia on Tuesday warned against the increased retail participation in the derivative segment (futures & options) and other risky products. “While it is encouraging to see increase of retail investors in securities market, increased retail participation in derivative segment and other risky products is a matter of concern,” Bhatia said. Close to 93 per cent, or 9 out of 10 individual traders, in the equity F&O segment incurred losses, with aggregate loss exceeding Rs 1.8 lakh crore between FY2022 and FY2024, Sebi data shows. India accounts for largest volume of F&O globally, more than 50% of F&O volumes globally are done in India. “This crown is worn by India, and this is a crown we do not wish to wear,” Bhatia said while speaking at the Morningstar Investment Conference. “F&O cannot be a national pastime, we need to do serious investing and investors should participate in wealth that is being created in the country through pooled vehicles like mutual funds or directly,” he said. Sebi had recently released a set of six measures to strengthen the equity index derivatives, also known as equity futures & options (F&O), framework. The norms include raising the entry barrier by increasing the contract size and upfront collection of option premium. Bhatia said Sebi is planning to come out with a discussion paper in a bid to tighten the regulatory framework for IPOs of small and medium enterprises (SMEs). The Sebi move follows huge subscription and listing gains by SME IPOs in the last few months. “What we have seen is pretty disturbing," he said. "There's concern regarding the IPO participation, particularly in SME IPO by Indian investors, which has raised concerns for us. SME listings are closely monitored by exchanges and SEBI to ensure they don't engage in irrational exuberance price manipulation or fraudulent trade practices," he said. “We don't feel very comfortable about what's going on – especially the number of times IPO issues are oversubscribed and the way market making happens the way underwriting happens," Bhatia said. According to G20 Sherpa Amitabh Kant, with structural reforms, India has become far more efficient economy, without leakages, and with a strong digital infrastructure which no other country in the world has. “India has pursued a very different model versus other Western nations. In India we have created a digital layer on top of which we have allowed the private sector to compete, everyone is competing in the marketplace and huge innovation is taking place,” Kant said. The Bank of International Settlement has said what India has achieved in the last 7 years, it would have normally taken India 50 years had it not been for what we have achieved in digital infrastructure, Kant said.
