Derivatives not designed for quick gains: Sebi chief

MUMBAI: Retail investors ' growing exposure to losses in derivatives has prompted Sebi chairman Tuhin Kanta Pandey to urge caution and advocate responsible investing . Sebi research showed that many retail investors trading in derivatives lose money because they fail to grasp associated risks, Pandey said while speaking at the World Investor Week 2025 event here.

"Derivatives are designed for hedging and risk management , not quick gains, which may be illusory," he said, adding that investors must align their trading with their financial goals and capacity for risk.

According to a new Sebi-led investor survey covering around 90,000 households, India now has 134 million unique investors. Awareness of market products has expanded sharply, with 63% of households - around 213 million - knowing of at least one securities product. Yet only 9.5% of households, about 32 million, actually invest. Just 36% of investors possess moderate or high market knowledge , a gap that Pandey said leaves them "vulnerable to fraud and misinformation".

Digitalisation, while deepening access, has also amplified fraud risks . "Unsolicited messages, fake trading apps, and dubious influencers often promise what no market can - guaranteed returns," Pandey said. Nearly 80% of Indian households remain risk-averse, he noted, and are thus easily drawn into deceptive high-return schemes. The main barriers to wider participation, the survey found, are lack of knowledge, distrust, and fear of loss.


Pandey said the regulator is focusing on three fronts - awareness, technology , and grievance redressal - to strengthen investor protection. Sebi plans to expand regional outreach through campaigns like 'Sebi vs scam', and will open offices in major cities to improve engagement. Digital platforms such as the Sarthi app and Sebi website feature "spot a scam" tools.

Technological safeguards are being reinforced through verified UPI handle mechanisms. Payments to Sebi-registered intermediaries must now display a green 'thumbs-up' icon to confirm authenticity. The new 'SebiCheck' tool allows users to verify intermediary bank accounts and IFSC codes. In 18 months, Sebi has escalated over 1 lakh instances of misleading content to social media platforms for removal.

Pandey said responsible investing remains "the ultimate shield" against fraud. "A smart investor verifies before trusting, questions unrealistic promises, and relies on credible sources," he said. "Our task is to equip them with knowledge," Pandey said, calling on market participants to "build a system rooted in facts, not fads".