Tuhin Kanta Pandey thinks that derivatives are not for short-term profits but rather for risk management and hedging.
Retail Investors Must Beware
Tuhin Kanta Pandey, the chairman of the Securities and Exchange Board of India (SEBI), issued a warning on Monday, emphasizing the need of responsible investment and financial literacy, pointing out that individual investors who trade in derivatives often suffer losses.
At the National Stock Exchange’s World Investor Week 2025 event, Pandey said, “SEBI research have regularly demonstrated that retail investors dealing in derivatives end up experiencing losses, typically because they do not completely comprehend the risk in these products.”
“Derivatives are not for short-term profits; they are for risk management and hedging.” Therefore, he advised retail investors to evaluate their risk tolerance, understand how these contracts operate, and refrain from making speculative transactions.
Investor Awareness Remains Low
Pandey emphasized that while SEBI may provide resources and protections, ethical investment is the best way to protect investors. “A wise investor disregards unsolicited offers on social media and only trusts reliable, confirmed sources,” he said.
The SEBI chief’s comments coincided with the publication of the results of a national Investor Survey that was carried out in collaboration with AMFI and Market Infrastructure Institutions (MIIs) and included over 90,000 households.
Just 36% of investors have high or moderate market awareness, according to the report, and 63% of Indian households are aware of at least one securities market product, but only 9.5% of them actively engage. “This lack of awareness is a weakness that puts our investors at risk and leaves them open to deception,” Pandey said.
SEBI Fights Digital Scams
He cautioned that scammers are using digital platforms more often to deceive investors. “The one thing our markets can never provide—guaranteed returns—is what unsolicited messaging, questionable influencers, and fraudulent trading applications promise,” he said.
Investors may evaluate payment channels and identify frauds with the use of initiatives like the “SEBI Check” tool and the Validated UPI Handle method. Ninety percent of users polled expressed satisfaction with platforms such as SCORES 2.0 and the SMART Online Dispute Resolution (ODR) system.
Investor Trust Drives Growth
Pandey also praised the increase in retail involvement, pointing out that there are already 134 million unique investors in India. However, he emphasized that trust and informed engagement are essential for the next stage of development.
“When trust is undermined, our economy’s engine falters. He said that the cost of capital is rising, people are hesitant to invest, and savings are still ineffective.
The SEBI head praised NSE’s efforts, including the “Finance Learning Game,” “Scambush,” and “Nivesh 40” events across 40 centers, and asked other stakeholders to host extensive investor awareness programs throughout the week.