Finance Minister Nirmala Sitharaman on Thursday clarified that the government is not planning to prohibit trading in futures and options (F&O) contracts. She emphasised that while the government will create awareness about the risks involved in these derivatives, it will not close the doors for investors in this segment. Speaking at the SBI Banking and Economics Conclave 2025, she pointed out that trading in F&O entails significant risks including leverage and market volatility, which can lead to heavy losses for retail investors.
Sitharaman urged investors to take responsibility by understanding these risks before trading in derivatives. She also invited suggestions on how to better address the challenges faced by retail investors in the F&O market. The statement comes amid findings by Securities and Exchange Board of India (Sebi) that more than 90% of individual traders incur losses in F&O trading, with total losses crossing Rs 1 lakh crore last fiscal year.
Sebi has taken several steps to curb excess speculation and protect investors without banning weekly futures and options contracts on the Nifty and Sensex indices. Sitharaman’s remarks reinforce the government’s approach of balancing investor protection with market innovation, ensuring that derivatives remain a useful tool for hedging and price discovery, while cautioning investors to trade wisely and responsibly.This balanced stance aims to support a healthy and transparent derivatives market in India.
