According to Vijay Kedia, the F&O sector needs some amount of regulation and education due to the increasing number of investors, or else it runs the risk of turning into a gambling den for individuals seeking quick money.
While the NSE, BSE, and SEBI are doing their part to educate investors, in Kedia’s opinion, much more can be done.
A certain amount of education and regulation are required due to the expanding number of investors in the F&O area or else it runs the risk of turning into a gambling den for people trying to make quick money, according to Kedia.
“Ninety percent of those involved believe they are playing an online game. Vijay Kedia even called for a ban on futures and options trading for new investors, claiming that no one has the intelligence, understanding, or resources to play the future option.
The market veteran compared it to a casino or playing poker on a mobile device and added, “This should be taken into consideration, this is high time, and it should be banned, otherwise the end result is bad.”
The market watchdog SEBI requested earlier this month that broking platforms notify users that over 90% of traders in the futures and options segment lose money. After COVID, India saw an increase in the number of retail investors, not just in SIPs but also in direct stocks and the Futures and Options (F&O) market. From 40.9 million in March 2020 to 123.5 million in July 2023, the total number of Demat accounts on the NSE has increased as of May 2023. The number of F&O contracts has also increased, from around 3 million in January 2020 to almost 8 billion in August 2023.
Kedia noted that having a technique that works in all markets is necessary since making money quickly using tactics like those that only work when the market is rising is frightening. “If something only works once, it’s a chance, not a strategy,” he declared.
In a tweet from four or five years ago, I advocated for the SEBI (Securities and Exchange Board of India) to outlaw new investors. You need a permission to drive a car, just like there is a legal drinking age, and vice versa, he claims.
Kedia acknowledged that SEBI might not be able to take harsh action. “In democracy, there is a formula that works similarly to how cigarettes and alcohol are sold but discouraged from consumption. Therefore, the only way to get ahead is to teach them the proper way to do things. For example, you must walk to the left, stop your car at the signal, and turn left if there is an ambulance so that they will let you pass. We utilize it on the market in the same way that we use it in everyday life, he continued.
While the NSE, BSE, and SEBI are doing their part to educate investors, in Kedia’s opinion, much more can be done.
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