At a minimum, he noted, retail investors receive stocks and mutual funds in return for the money they put in, which could increase in value over time.
But Sharma’s sharper criticism was aimed at the futures and options segment, where millions of retail traders participate but the majority lose money. He said the commissions and fees generated by F&O trading have created market capitalization and big piles of money for brokers, while the traders who fund these profits see little of it.
Sharma called it an “irreparable, non-refundable, non-recoverable wealth transfer” and described the phenomenon as a “permanent loss of capital” for small traders who misjudge risks or get lured into highly leveraged derivatives.
His comments come at a time when India has become the world’s largest derivatives market by volume. NSE’s notional turnover in index options regularly exceeds Rs 200 lakh crore per day, and regulator Sebi has repeatedly raised concerns about retail participation in leveraged products, especially weekly options.
Brokers, asset managers and fintech platforms have seen record growth over the past three years, driven by a wave of new traders joining F&O. At the same time, Sebi’s annual data shows that more than 90% of F&O retailers are losing money.
Sharma’s warning adds weight to the debate over whether India’s retail growth has created a healthy investment culture or a costly behavioral trap. As markets reach near-record highs and options volumes continue to break new records, the risks he highlighted remain at the center of policy discussions.
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