- With the advent of digitally driven applications and solutions of anything and everything under the sun, the unscrupulous and anti-social elements are taking ordinarily gullible people for a ride under promises galore. Undoubtedly, the underbelly of any society is flooded with dubious people wishing to make hay while the sun shines by luring with attractive promises. Unfortunately, there is no dearth of people falling prey to these elements despite innumerable cautionary exhortations. Why only the uneducated lot, even the so-called educated segment of society, have fallen prey to such dubious elements, losing hard-earned money in the bargain. The lure of making a quick profit induces people to invest money in unauthorized and illegal entities.
PC: BizzBuzz
- The resultant outcome is people losing substantial money for want of proper comprehension, awareness, and common sense. Thus, shielding ordinary investors from risky investments must be prioritized. For instance, look at how the derivatives market is playing out. As reported, the alacrity with which trading firm Jane Street has deposited Rs 4,875cr in an escrow account to resume trading shows how lucrative the Indian derivatives market is. Last year, the NYC-headquartered firm earned about Rs 20,000cr here. In the 27 months from January 2023 to March 2025, its India profit totalled roughly Rs 37,000cr. And Jane Street is one of many players in the world’s largest derivatives market, measured by contracts.
- Prima facie, this might sound like an achievement, but it is a concern, nonetheless. As Sebi’s months-long investigation found, small retail investors responsible for India’s derivatives trading frenzy might have been taken for a ride. It says Jane Street manipulated stock value on the Nifty50 index, an intentional, well-planned, and sinister scheme, to profit from derivatives. That was the reason for its July 4 order barring the company from the securities market. Jane Street will appeal against the decision, but even if it is absolved of blame, the securities market remains a cautionary tale for small investors, and Sebi’s data illustrates this best. India’s middle class is broadly said to start at the Rs 5L mark, with monthly earnings of around Rs 40,000.
PC: The Hindu Business Line
- But people earning less than this amount participated in three out of every four futures and options (F&O) trades last fiscal. In effect, derivatives trading became the new weekly lottery for a segment that might be struggling to pay bills. And just as lottery winners are rare, most F&O investors lost money – Sebi says 91.1%. The average loss per investor was Rs 1.2L. Altogether, retail investors lost Rs 61,000cr in derivatives trading last fiscal, while trading firms, both Indian and foreign, pocketed Rs 61,000cr. It’s a spectacular wealth transfer in the wrong direction. Undeniably, derivatives have a role in the modern financial system, but beyond the understanding of the ordinary retail investor. Sebi should initiate better financial education for all concerned.
