Market regulator SEBI is considering making the entry rules for derivatives trading (F&O) more strict.
Early discussions suggest that only those traders who have a certain level of equity exposure may be allowed to participate in F&O.
This means an investor’s eligibility could depend on how much money they have invested in the stock market, equity mutual funds, or PMS.
Focus on Equity Investment Levels
Sources say SEBI may use direct stock holdings, equity mutual funds, and PMS investments as key benchmarks.
Only investors with strong equity exposure may be allowed to trade in F&O. SEBI is expected to discuss this proposal in detail with stock exchanges.
A consultation paper is also likely to be released soon, as reported by CNBC-TV18. This paper will explain the suitability rules for F&O trading.
After gathering suggestions from stakeholders, SEBI will issue the final guidelines.
Concerns Over Heavy Losses by Retail Traders
The move comes after worrying data about retail traders. In 2024–25, individual traders lost more than ₹1 lakh crore in the F&O segment. Reports also show that 91% of retail investors trading in F&O lost money.
Due to rising retail speculation, large uncontrolled losses, and increasing trading volumes, SEBI is considering stricter regulations.
The aim is to ensure market stability and protect small investors from major financial risks.
