Madhabi Puri Buch: Rising F&O trade becomes macro issue now, household savings going into speculation: Sebi chief

Sebi chairperson Madhabi Puri Buch on Friday said the capital markets regulator is “compelled” to warn against speculative bets in the futures and options (F&O) segment because it has become a “macro issue”, affecting the broader economy now. Household financial savings are going into the speculative bets, belying the expectations of being used for capital formation and the youth is losing tonnes of money in such trades, Buch said.

“…it has gone from being a micro issue of an investor to a macro issue of the economy itself. And therefore, we felt compelled,” Buch said, speaking at a SBI MF event here.

A research carried out by the regulator had found that investors lose in 9 out of 10 trades in the F&O segment. Starting from a level where it insisted on disclosing risks, Sebi has been proactively trying to dissuade investors from the segment lately.

Buch said Sebi chose to change itself because of the data on the huge rise in volumes in the segment, and reminded everybody of the regulator’s responsibility on market development to justify such a warning.

She said that recently, the regulator chose to flag asset price froth in certain equity segments because no other stakeholders were doing their jobs, and exuded confidence of there being sufficient aspects in place to stop it now. Meanwhile, Buch also said that Sebi feels that the fininfluencers are indulging in a regulatory arbitrage at the moment by getting registered as investment advisers and the regulator will soon come up with a consultation paper on the same. Speaking at the event to mark the fund house’s assets under management crossing Rs 10 lakh crore, Buch said the growth in the industry will ensure that the AUM doubles to Rs 20 lakh crore in three years.