From test to income clause: How Sebi can save small investors from F&O risk

Market regulator might introduce income and education criteria to ensure gullible investors stay away from the high-risk derivatives segment

Capital market regulator Securities and Exchange Board of India (Sebi) is concerned over the growing participation of retail investors in the high-risk futures and options (F&O) segment.

In July, Sebi had issued a discussion paper ‘growth and development of the equity derivatives market', where it highlighted the high derivatives-to-cash turnover in the domestic market. It also raised concerns over many small investors dealing only in the derivatives segment, essentially meant for hedging the underlying exposure in the cash segment.

The discussion paper issued by Sebi was open-ended, where it invited market participants to give feedback to some of the issues plaguing the