Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey on Monday cautioned that retail investors trading in derivatives often face losses, underscoring the need for responsible investing and financial literacy.
“SEBI studies have consistently shown that retail investors trading in derivatives end up facing losses, often because they do not fully understand the risk in these products,” Pandey said at the World Investor Week 2025 event organised by the National Stock Exchange.
“Derivatives are meant for hedging and risk management, not for quick gains. Retail investors should therefore assess their risk capacity, learn how these contracts work, and avoid speculative trades,” he added.
Pandey emphasised that while SEBI can provide tools and safeguards, the ultimate shield for investors lies in responsible investing. “A smart investor relies on credible, verified sources, and ignores unsolicited offers on social media,” he said.
The SEBI chief’s remarks came alongside the release of findings from a nationwide Investor Survey covering over 90,000 households, conducted jointly with Market Infrastructure Institutions (MIIs) and AMFI.
The survey revealed that while 63% of Indian households are aware of at least one securities market product, only 9.5% actually participate, and just 36% of investors possess high or moderate knowledge of the market. “This knowledge gap is a vulnerability that exposes our investors to risks and makes them susceptible to fraud,” Pandey said.
He warned that fraudsters are increasingly exploiting digital platforms to mislead investors. “Unsolicited messages, dubious finfluencers, and fake trading apps promise the one thing our markets can never offer—guaranteed returns,” he said.
Campaigns like ‘SEBI vs SCAM’, the Arth Yatra Contest 2025, and partnerships with the Ministry of Panchayati Raj aim to promote financial literacy in regional languages. Initiatives such as the Validated UPI Handle mechanism and the ‘SEBI Check’ tool help investors verify payment channels and detect frauds. Platforms like SCORES 2.0 and the SMART Online Dispute Resolution (ODR) system have received satisfaction from 90% of users surveyed.
Pandey also lauded the rise of retail participation, noting that India now has 134 million unique investors, but stressed that the next phase of growth must rest on trust and informed participation.
“When trust is broken, the engine of our economy falters. People are reluctant to invest, savings remain unproductive, and cost of capital rises,” he said.
The SEBI chief urged all stakeholders to conduct large-scale investor awareness programmes during the week and commended NSE’s initiatives such as ‘Finance Learning Game’, ‘Scambush’, and ‘Nivesh 40’ events across 40 centres.
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