Household Savings Diverted to Speculative F&O Bets: Sebi Chief Warns of Economic Impact | India Business News – Times of India

MUMBAI: Sebi chief Madhabi Puri Buch on Friday warned about the increasing speculation in the derivatives space again, saying it has morphed into a macro issue that is affecting the broader economy. She said household savings, rather than going into capital formation, are being diverted for speculative bets through the futures & options segment of the market.
“Many young people who have entered that market have lost money… nobody could have expected that,” she said. The markets regulator chief was speaking at an SBI Mutual Fund’s event to mark the milestone of crossing the Rs 10-lakh-crore AUM, the first fund house to do so. “At a macro-level, we are worried that the household savings are not going into capital formation but into speculative activities.”

Over the last few months several of the ministers and top govt officials, including Sebi chairperson herself, have been warning about this trend of excessive speculation in the F&O segment.
Data from Sebi’s latest monthly bulletin showed that in May this year, the total turnover in the equity derivatives segments of the two bourses together was Rs 9,504 lakh crore, a rise of 71% over May 2023 figure, which was at Rs 5,548 lakh crore. In comparison, the aggregate turnover in the cash segment in May 2024 was Rs 26.4 lakh crore. Last year, a research paper by the regulator showed that nearly nine out of 10 investors in the F&O space lost money.
To rein in excessive speculation that could affect the whole economy in any major way, Sebi is expected to propose a 5x increase in the minimum contract size in the F&O segment. Earlier this week, it also proposed a new product in that would allow wealthy investors to trade in the F&O space, but through the more regulated mutual fund route.

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