Securities & Exchange Board of India (SEBI) is widely known as a designated regulatory body for the investment markets in India. This board plays a major role in the maintenance and stability of financial and investment markets. According to SEBI’s Preamble, this board is responsible for protecting the interests of market investors, promoting the development, and regulating the securities market. The continuous regulatory work and actions to support the investors’ investment in the market have ranked India high in the World Bank ratings.
Now, the retail investors are confident and aware of market risks. In fact, they are actually having good times. All credit goes to the large factory of SEBI Registered advisors, analysts, and researchers who are now available at the various online stock market advisory platforms where they are authorized to give calls on a portal where investors and traders can go through for right guidance and resources to analyze their investments in share market and other financial markets.
Thanks to SEBI, now the retail investors are performing really well in share and future markets. They’ve been informed of market risks. But, lately, it is so frequent that raised a question,
Are SEBI’s actions stopping equity market from maturing?
Because, as far as we can see SEBI’s professional experts are saving investors from the misdoing of market participants. No doubt, it is a great thing and we couldn’t agree more. But, simplifying the decisions for retail fells will prevent them from maturing as experienced investors.
There is an old saying:
“Practice makes a man perfect.”
Any only way to get to know the market is by making mistakes.
How is it affecting Indian Stock Market?
In recent studies, it was found that Indian stock market has become the victim of sudden growth in recent years with derivatives trades of 15 times the trading in cash markets. On top of that in the last decade, the equity derivative volumes changed drastically and changed to 9 times while cash volumes didn’t even double.
But what is a more concerning issue here is the retail participation of consumers in future & options which increased as well and come to 25 percent. Future market is one of the major financial markets which has strong competition b/w buyers and sellers and is extremely risky. As compare to stock markets, it is said that future market is riskier than trading in stocks.
Which is why, instead of understanding, “how the market works?” retail participants are relying on SEBI advisors who are guiding them in their investment related decisions. The result, it was put forward for consideration that all individual F&O traders share their Income Tax Returns to their broker so that they can work on the ideal market for each of them. Despite good intentions, people are not ok with this and believe trading in markets is completely irrelevant to the profession, income level, and qualifications etc.
Yeah! SEBI can conduct some sort of camps or seminars in college on derivatives and conduct qualifying exams to test the ability. Anyhow, Individuals who have knowledge and trading skills (not based on bookish language or earnings) should be allowed to participate in F&O market.
After all, Indian capital market is still in mid-stage of development. And if the new investors will be bounded by some set of rules and conditions then it would be difficult for the market to develop.
Note: All information & data provided in this article is for the educational purpose as well as to give general information on the finance & economy, not to provide any professional advice or service. Views & opinions are not biased against the company and do not affect any official policy or any other agency, an organization within the content.