Regulations alone can't save you if you don't protect yourself: BSE CEO

Stressing the need for investor awareness and responsibility, BSE Managing Director and CEO Sundararaman Ramamurthy on Thursday said that regulations alone cannot protect investors if they do not take adequate precautions while investing.

"You trade what you understand, and you understand what you trade if you don't do that, you have a problem," Ramamurthy said, urging investors to be vigilant and informed.

He criticised the tendency of investors to rely on hearsay rather than due diligence.

"You scan a vegetable before you buy it, but when you invest your life's earnings, you go by hearsay that's not how it should be," he said.

On regulatory expectations, the BSE chief remarked that there is a general perception that regulators are blamed when investors lose money, but when markets do well the same person praise their own knowledge.

"If you don't want to safeguard yourself, no amount of regulation can save you. Be alert," he stressed.

Addressing the issue of retail participation while speaking at the Calcutta Chamber of Commerce, Ramamurthy advised that small investors who are not market experts should opt for the mutual fund route and even then, they should avoid thematic funds and instead choose broad-based mutual funds or large-cap funds to diversify risk.

He also encouraged women and the youth to begin investing early in their careers.

Highlighting the potential of India's SME sector, the BSE CEO pointed out that only about 40 companies from this region are currently listed on the stock exchange, while the actual potential could be well over 1,000. He urged more small and medium enterprises to consider listing as a viable route to raise funds and grow their business and unlock their potential.

Responding to a question on possible manipulation in SME listings, Ramamurthy acknowledged that frauds such as pump-and-dump schemes could not be ruled out entirely even if regulators and stock exchanges are vigilant. He said that BSE was deploying AI and large language models on trial for initial scanning of IPO documents to detect areas of concern.

He reiterated that it is crucial for investors to understand the businesses they invest in and conduct proper due diligence.