Unchecked retail F&O play could trigger challenges for market: FM

Mumbai: Finance minister Nirmala Sitharaman on Tuesday said unchecked trading by individuals in the futures & options (F&O) segment could trigger challenges for the market. “Any unchecked explosion in retail trading of futures and options can create future challenges, not just for the markets, but for investor sentiment and household finances,” Sitharaman said at an event organised by BSE.

She appealed to stock exchanges to work closely with market regulator Sebi to ensure stringent compliance and robust regulatory standards so that investor confidence grows further.

“Household finances have made a generational shift… We want to ensure that’s not going to be shattered,” Sitharaman said addressing the ‘Viksit Bharat 2047’ event here.

Both the BSE and NSE should ensure market stability and mitigate systemic risks, she added. “Stock exchanges should leverage technology and adopt blockchain and AI and have big data to improve market efficiency, transparency and security.”

Sitharaman said financial sector regulators need to adopt a soft-touch approach through public consultations while framing rules so that functioning becomes easy. “But even after they frame rules, they should be ready for further tweaking based on the inputs which come from people who are on the ground,” she said.”Regulators will have to be proactively engage with stakeholders so that even after due consultation regulations can further be tweaked for better compliance, soft-touch regulation and not be firm about things.”Sitharaman also said that persistent flow of domestic savings in stock market has become the counterbalancing force when foreign portfolio investors come and go. “There may not be actually any fluctuations despite the whimsical FPI movements. India’s own savings, which are coming from small retail investors, are providing the shock absorber for you,” she said .

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