NVDA Q3 Earnings Alert: Why our AI stock picker is still holding Nvidia stockRead More

NSE derivative trading likened to gambling amid rising investor losses

EditorAmbhini Aishwarya
Published 20/11/2023, 13:46
© Reuters.
NSEI
-

MUMBAI - At a recent event for investment professionals in Mumbai, concerns were raised about the surge in derivative trading on the National Stock Exchange (NSE) of India. Siddhartha Bhaiya, managing director at Aequitas Investment Consultancy Pvt Ltd, drew a stark comparison between the NSE's burgeoning derivative market and gambling practices in Las Vegas, highlighting the risks and heavy losses faced by retail investors in India.

The Securities and Exchange Board of India (Sebi) conducted research that revealed a significant uptick in individual equity Futures & Options (F&O) traders on the NSE. The numbers soared from 710,000 in the financial year 2019 to 4.52 million by the financial year 2022. This dramatic increase has been accompanied by a worrying trend: approximately nine out of ten equity F&O traders have incurred losses during this period. The average loss per trader has escalated to Rs 50,000 in FY22.

Bhaiya's comments underscore a growing concern about the potential negative impacts of derivatives on retail investors, who may not fully understand the complexities and inherent risks of these financial instruments. The findings from Sebi's research serve as a cautionary tale for traders and regulators alike, emphasizing the need for greater awareness and possibly more robust regulatory measures to protect investors from significant financial harm.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2024 - Fusion Media Limited. All Rights Reserved.