Markets regulator Sebi Chief Tuhin Kanta Pandey has ruled out the possibility of an aptitude test for retail traders wanting to participates in the Futures & Options (F&O) segment, saying it is impractical and prone to regulatory overreach.
The Securities and Exchange Board of India (Sebi) had earlier introduced measures in November last year in a bid to curb excess speculation in derivatives. These regulatory steps came in the wake of a Sebi study that revealed a staggering 9 out of 10 retail investors lose money while trading in F&O instruments.
When asked about the industry's suggestion of introducing tests for retail investors before permitting them to trade in risky derivative products, Pandey clarified the regulator's stance. "Right now, we aren't really considering any of those things."
He explained the concerns of practicality and effectiveness behind such proposals. "Number one, we have to also see, will it be a regulatory overreach? Will you be able to ...