SEBI chairman warns retail investors against speculative trade in derivatives

Sebi chairman Tuhin Kanta Pandey said on Monday that retail investors should prevent speculative trade in derivatives, which underlines the risks of these products.

“Sebi studies have consistently demonstrated that retail investors who act in derivatives ultimately have to do with losses, often because they do not fully understand the risk in these products,” said Sebi chairman Tuhin Kanta Pandey at the World Investor Week 2025 event organized by NSE.

“Individuals have to investigate whether they try to build up long -term wealth or who want to participate in speculative, short -term trade … Derivatives are intended for hedge and risk management, not for fast profit. Retail investors must therefore assess their risk capacity, learn how these contracts work and avoid speculative transactions,” he added.

Increased access, simplified on-boarding and wider consciousness has led to the number of unique investors in the securities market ecosystem that increases to 13.4 Crore, according to SEBI data.

A recent study by SEBI shows that 63% of Indian households (21.3 crore households) are aware of at least one product product for effects. However, the actual participation is 9.5% of households (3.2 crore households).

The SEBI chef emphasized that only 36% of investors have a high or moderate knowledge of the securities market. This knowledge gap is a vulnerability that exposes investors to risks and makes them susceptible to fraud, he said. Pandey said that although Sebi can offer the tools, the final shield for investors is smart through responsible investing. “A smart investor relies on credible, verified sources and negative offers on social media,” he said.

In the past 18 months, more than 1 Lakh have been illegal content from various social media platforms after Sebi had expressed concern about misleading content with companies such as Google and Meta.