Government Emphasizes Awareness Over Restriction in F&O Trading

Finance Minister Nirmala Sitharaman clarified the government's position on Futures and Options (F&O) trading this week, highlighting a focus on raising awareness rather than imposing restrictions.

Her statement followed remarks by Sebi chairman Tuhin Kanta Pandey, who also rejected closing weekly derivative contracts for Nifty and Sensex. The minister emphasized that while the government won't halt F&O trading, it will actively inform investors about the inherent risks. Speaking at the SBI Banking and Economics Conclave 2025, Sitharaman urged investors to comprehend these risks fully.

A Sebi study recently revealed that 91 percent of individual traders in the F&O segment faced losses amounting to over Rs 1 lakh crore in FY25. Last November, Sebi implemented measures to reduce excessive speculation in derivatives, noting the role of futures and options in hedging, speculation, and arbitrage, but also underlining their significant risks, such as leverage and market volatility.