Retail Traders’ Net Loss of 1.81 Lakh Crore: Minister of State for Finance addresses Woes based on SEBI Findings
The Minister of State for Finance detailed the number of awareness programs launched to educate retailers and deter such losses on Futures & Options
Retail Traders – Retail Traders’ Net Loss – Minister of State for Finance – Minister of State for Finance addresses – Woes based on SEBI Findings – SEBI Findings – taxscan
Retail Traders – Retail Traders’ Net Loss – Minister of State for Finance – Minister of State for Finance addresses – Woes based on SEBI Findings – SEBI Findings – taxscan
The Ministry of Finance has released an extract of answers to an unstarred question raised in the Lok Sabha pertaining to a collective loss of 1.81 Lakh Crore incurred by retail Futures & Options (F&O) traders during a three year period between 2021-22 and 2023-24, which were addressed by Minister of State for Finance Pankaj Chaudhary.
The unstarred question No.46 was raised by Parliamentarian Sribharat Mathukumilli raising concerns on the basis of the findings by a study dated 23 September, 2024 released by the Securities and Exchange Board of India (SEBI) published wherein it was found that the aggregate losses of individual F&O traders exceeded ₹1.8 lakh crore over the three-year period between 2021-22 and 2023-24 and that 93% of individual F&O traders incurred losses during the same period.
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Sribharat Mathukumilli queried the reparative measures undertaken by SEBI, including comparative studies and implementation of statutory regulations to address the issues and the effectiveness of the measures thereof.
Minister of State for Finance Pankaj Chaudhary referred to the findings released by SEBI which analyzed retail trading behavior in equity derivatives from 2021-22 to 2023-24, revealing that a major percentage of traders engaged in speculative F&O trading suffered consistent losses, prompting regulatory interventions to curb excessive risk-taking.
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SEBI Circular dated 1 October, 2024 proposed numerous reforms to the regime based on expert recommendations and consultations with market stakeholders including Rationalization of weekly index derivatives, increased contract size for index derivatives, and higher margins on short options positions on expiry days from 20 November, 2024.
The reforms also included the procedure to conduct upfront collection of option premium from buyers and removal of calendar spread treatment on the expiry day to take effect from 10 February, 2025, along with intraday monitoring of position limits with effect from 1 April, 2025.
The Minister of State for Finance further stated that the government had been actively promoting investor awareness arm-in-arm with SEBI and other market intermediaries, conducting 43,826 awareness programs in Financial Year 2023-24, reaching 2.7 million participants across 36 States and Union Territories and 687 districts within them.
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The awareness programs regarding multifarious topics including retail F&O traders, basic investing principles, product features, risks involved, investor rights and responsibilities, common features of investment scams - all of which are conducted free of cost in Hindi, English and other regional languages.
To Read the full text of the Order CLICK HERE
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