SEBI Chairperson Tuhin Kanta Pandey has said that the regulator is not considering any plan to introduce aptitude tests for retail investors who want to trade in Futures and Options (F&O). He explained that such a move would be difficult to implement and might cross the line of regulatory overreach. In an interview with PTI, he stated that while concerns around retail losses in derivatives are valid, making tests mandatory isn’t a practical solution.
Pandey pointed out that although some people in the market have suggested screening retail investors through testing, SEBI does not find this idea feasible. He asked key questions—who would conduct the test, how would it be structured, and how useful would it actually be? He added that if such tests are introduced for F&O, similar demands may arise for other investment products like mutual funds, creating unnecessary complications.
This statement comes after SEBI’s earlier steps to control excessive speculation in the derivatives market. In November, SEBI had introduced curbs on F&O trading after a study revealed that nearly 90% of retail investors incur losses in this segment. The data raised major concerns, prompting regulatory action to protect retail participants.
Rather than imposing tests, SEBI appears to be focusing on increasing investor awareness and financial literacy. Pandey emphasized the need for practical and balanced regulations that support market integrity without discouraging participation. He suggested that educating investors is a more effective path than restricting them through tests or certifications.
In summary, SEBI has made it clear that there is no move to introduce aptitude tests for retail F&O traders. The regulator will continue to monitor the market and look for realistic ways to safeguard small investors without creating hurdles for genuine participants.
Source: PTI Interview with SEBI Chairperson Tuhin Kanta Pandey
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