'Avoid Speculative Trading In F&O': SEBI Chief Tuhin Kanta Pandey's Big Warning To Investors

SEBI chief Tuhin Kanta Pandey on Monday, warned retail investors against speculative trading in Futures and Options. He was speaking at the World Investor Week 2025 at the National Stock Exchange (NSE).

“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.

Underlining the importance of informed decision-making and vigilance in trading, Pandey said that the real purpose of derivatives is to hedge and manage risks and not for profit-making.

Principles for Responsible Investing

Pandey advocated for responsible investing as a defense against financial missteps. He advised, “A smart investor relies on credible, verified sources, and ignores unsolicited offers on social media.”

Best investing practices according to SEBI Chief

1. Invest Time: Take time to understand investment options thoroughly.
2. Verify Information: Check the registration status of financial entities on SEBI’s official website.
3. Question Unrealistic Promises: Be wary of promises offering “guaranteed” returns, as they often signal scams.
4. Do Your Own Research: Avoid relying solely on social media influencers or external advice.

These steps aim to empower investors to make informed choices and avoid impulsive decisions.

Also Read: IPO Rush Alert, From Tata Capital To LG Electronics: Here's Full List

Only 36% of investors possess high or moderate knowledge of the securities market - SEBI Chief

Pandey emphasized the need for retail investors to evaluate their risk tolerance before engaging in F&O trading. He stated, “Retail investors should therefore assess their risk capacity, learn how these contracts work, and avoid speculative trades.”

He encouraged aligning investment decisions with long-term financial goals rather than chasing short-term gains. Highlighting a concerning statistic, he noted, “Only 36% of investors possess high or moderate knowledge of the securities market,” making many vulnerable to fraud.