New Delhi: Sebi has utilized more than Rs 62 crore in the past five years for educating investors, specifically on risks and volatility in the Futures & Options (F&O) segment, as informed to Parliament on Tuesday.
In a written response to the Rajya Sabha, Minister of State for Finance Pankaj Chaudhary disclosed that Sebi utilized Rs 2.73 crore from its Investor Protection and Education Fund (IPEF) in FY 2023-24, along with Rs 11.93 crore in FY23, Rs 6.81 crore in FY22, Rs 28.84 crore in FY21, and Rs 11.84 crore in FY20.
Trading in Futures and Options involves contracts that gain their value from a base asset, such as stocks or commodities. Futures contracts require the buyer and seller to trade at a fixed future date and price, whereas options grant the holder the choice, but not the requirement, to purchase or sell the asset at a predetermined price during a specific timeframe.
These financial tools are utilized to manage risks, bet on price changes, and exploit price variations. Nevertheless, they are accompanied by notable risks, such as leverage risk and market volatility, that have the potential to result in substantial losses.
A week ago, Finance Minister Nirmala Sithraman increased the securities transaction tax (STT) on futures and options trading starting October 1, in an effort to address worries about excessive activity in the derivative market
Chaudhary mentioned that Sebi and other Market Infrastructure Institutions regularly conduct programs to raise awareness about F&O segment risks. Clients must sign a Risk Disclosure Document during account opening to understand potential risks. In the period of 2023-24, Sebi, together with its regulated entities, organized 43,826 investor awareness events in 687 districts, reaching over 27.93 lakh participants or potential investor.
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