Nirmala Sitharaman Flags Risk Of Unchecked Retail F&O Trading On Household


Finance Minister Nirmala Sitharaman warned of “unchecked explosion” in high-risk future and options trading by retail investors, that can have negative impact on household finances.

“Any unchecked explosion in retail trading in F&O can create future challenges, not just for the markets (but) for investor sentiment and also for household finances,” she said at an event at Bombay Stock Exchange in Mumbai on Tuesday.

Household finances have made a generational shift and the government and regulatory bodies want to safeguard them, the minister said.

The surge in retail participation in the F&O segment has raised concerns, after a Securities and Exchange Board of India study revealed that nine out of 10 retail investors suffer a loss on their bets in the equity derivatives market.

Sitharaman also appealed to the BSE to work closely with the markets regulator, to help investor confidence by stringent compliances and robust regulatory standards. The BSE and the NSE should mitigate systemic risk and ensure market stability, she said.

“Stock exchanges need to ensure market stability while working with SEBI. Trading needs to be more efficient and user-friendly.”

Even as the equity markets are hit with election-related volatility, Sitharaman expressed confidence in Narendra Modi’s return for a third term.

“Stability of government and policy is an important criteria for markets to be efficient. PM Modi’s third term with good governance is what we are looking forward to,” she said.

(With inputs from PTI)

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