The real power of the stock market lies in the long-term view and will assist investors in wealth creation over a sustained period, said Madhabi Puri Buch, chairperson of the Securities and Exchange Board of India (Sebi).
Cautioning investors who have a short-term view, Buch said the “odds are not in their favour” and there could be losses “on a weekly or daily basis.”
While reiterating Sebi’s findings that nine out of ten investors lose money in derivatives, she added that the continued inclination towards futures and options (F&O) “confuses and surprises” her.
The Sebi chairperson was speaking at the launch of Investor Risk Reduction Access (IRRA), a platform to help investors square off, close, or cancel their existing positions in case of any technical glitch or outage at the broker's end.
In the event of an outage from the broker, they will inform the stock exchanges following which a message will be sent to the clients for accessing the platform. Stock exchanges may also initiate it after consultation with each other and the broker in case of a glitch.
Buch added that the platform will act as a safety net for situations where investors are exposed to market risk due to a broker's downtime.
Highlighting the collaborative approach from industry stakeholders, Buch said the industry standard forum for stock brokers had made progress in addressing implementation challenges related to the upstreaming of client funds.
Sebi will also be issuing a simplified circular on the same, she said, adding that such challenges had been resolved.
The stock broking industry and bodies have submitted a list of 50 items to the market regulator for operational simplification and standard setting.
"If there is an easier path, then there is no reason to take the harder path," Buch said, pointing to the compliance challenges and feedback received.