Mumbai, November 20 (Language) Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch said on Monday that she is surprised and confused to see the interest of investors in the futures and options sector. This is the situation when 90 percent of the people investing in it are facing losses.
He also said that investors need to focus on the long term. This strategy has great potential for returns above inflation.
The SEBI chief referred to a recent research by the capital markets regulator while launching the Investor Risk Hedging Access (IRRA) platform at BSE, Asia’s oldest stock exchange, here. According to this, only 11 percent of the 45.24 lakh individual traders in the futures and options segment (F&O) have made profit.
According to research, investor participation in the F&O segment has increased rapidly during the pandemic. The total number of individual traders has increased by more than 500 percent from 7.1 lakh in FY 2018-19.
“I’m always a little confused and surprised by the fact that while people are aware of the risks in F&O, they also realize that it’s not in their favor,” Butch said. Even after that they are investing in it. This is beyond comprehension.”
“There is a 90 percent chance of investors losing money in the futures and options segment,” he said. But we also know, and the available data shows us, that if you take a long-term view of the market and you invest for the long term, you will rarely go wrong.”
“There is a strong possibility that if an investor stays in the market for a long time, his wealth i.e. returns will be higher than the rate of inflation in the economy,” the SEBI chief said.
He ‘urged’ everyone to take a long-term approach to investment. He said that it is better to invest in the futures and options segment in the long term rather than losing money every day, which has better chances of good returns.
According to SEBI’s research paper, 89 percent people lost money in the futures and options segment in the financial year 2011-12. Their average loss was Rs 1.1 lakh. Some people were lucky in this. His average profit was Rs 1.5 lakh.
More than one-third of investors in the F&O segment are in the 20-30 age group compared to only 11 per cent in FY 2018-19.
He also said that the broking industry and the stock market have probably agreed to focus on 50 things to streamline things and set standards.
The SEBI chief also praised the stakeholders for working together.