Sebi Chairman Urges Retail Investors too Shun Speculative Derivatives Trading
Mumbai, October 6, 2025 - Retail investors should avoid speculative trading in derivatives due to the inherent risks, Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey cautioned on Monday. Speaking at the World Investor Week 2025 event organized by the National Stock Exchange (NSE), Pandey underscored that Sebi studies consistently demonstrate losses for retail investors engaging in derivatives trading, often stemming from a lack of understanding of the associated risks.
“Individuals should examine whether they seek to build long-term wealth or want to engage in speculative, short-term trading…Derivatives are meant for hedging and risk management, not for speedy gains,” Pandey stated. He advised retail investors to carefully assess their risk capacity, thoroughly learn how derivatives contracts function, and refrain from speculative trades.
The warning comes as participation in the Indian securities market expands. Sebi data reveals a significant increase in unique investors to 13.4 crore. A recent Sebi-commissioned survey indicates that 63% of Indian households (21.3 crore households) are aware of at least one securities market product, though actual participation remains at 9.5% (3.2 crore households).
Though,Pandey highlighted a critical knowledge gap,noting that only 36% of investors possess high or moderate knowledge of the securities market,leaving them vulnerable to risks and potential fraud. He emphasized that while Sebi provides tools for investor protection,”the ultimate shield for investors is to be smart through responsible investing,” relying on credible sources and dismissing unsolicited offers on social media.
Sebi has been actively working to combat misleading content online, having removed over 1 lakh unlawful items from platforms like Google and Meta in the last 18 months.