The former Congress chief, Rahul Gandhi, has called out the Securities and Exchange Board of India (SEBI) to reveal the names of the 'big players' who have made a killing in Futures and Option (F&O) trading at the expense of small investors. A study conducted by SEBI has revealed that the average net loss for individual traders in F&O trading in FY24 was Rs 1.2 lakh, resulting in a total loss of Rs 1.8 lakh crore for small investors. It also showed that only 7.2% of individual traders made a profit, while 93% incurred an average loss of Rs 2 lakh per trader. The study has called for stricter regulations and control over F&O trading.
SEBI Under Fire for Lack of Transparency in F&O Trading
The Securities and Exchange Board of India (SEBI), the regulatory body for India's securities market, has come under fire for its alleged lack of transparency in the Futures and Option (F&O) trading segment. Recent revelations have sparked concerns among investors and raised questions about SEBI's ability to protect their interests.
Background
F&O trading involves speculating on future prices of underlying assets like stocks. It is a highly leveraged form of trading that can both amplify gains and losses. While F&O trading can provide opportunities for skilled traders, it also carries significant risks for inexperienced investors.
SEBI's Study
A study conducted by SEBI revealed startling statistics about the performance of individual traders in F&O trading in FY24. It found that:
Call for Transparency
Rahul Gandhi, former President of the Indian National Congress, has demanded that SEBI disclose the names of "big players" who have profited immensely from F&O trading at the expense of ordinary investors. Allegations have surfaced that certain influential individuals and institutions have taken advantage of insider information or employed manipulative tactics to reap disproportionate profits.
SEBI's Response
SEBI has defended its regulatory framework, stating that it has implemented robust systems to prevent market manipulation and protect investors. However, it has acknowledged the need for further improvements and has indicated that it is working on strengthening its surveillance mechanisms.
Top 5 FAQs
Q1: What are the risks of F&O trading? A1: F&O trading involves high leverage, which can magnify both gains and losses. Inexperienced investors and those without adequate risk tolerance should exercise caution.
Q2: How can SEBI improve transparency in F&O trading? A2: SEBI can enhance transparency by disclosing more data on F&O trading activity, including the volume of trades, open interest, and the identities of major participants.
Q3: why are small investors losing money in F&O trading? A3: Lack of knowledge, experience, and risk management skills are common reasons for losses among small investors in F&O trading.
Q4: What is SEBI doing to protect investors? A4: SEBI has implemented regulations to curb excessive speculation and market manipulation. It also conducts regular surveillance and takes disciplinary action against individuals or entities found to be violating its rules.
Q5: What can investors do to protect themselves? A5: Investors should educate themselves about F&O trading, manage their risk exposure appropriately, and avoid relying on tips or inside information. They should also consider consulting with a registered investment advisor.
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