New Delhi: Cautioning against investing domestic savings in futures and options trading, Chief Economic Advisor V Ananth Nageswaran on Saturday said there is a need to rethink the satisfication of F&O trading as it requires different financial literacy. it occurs.
Speaking at CII's Annual Business Summit, 2024, Nageswaran said whenever financial sector development precedes national development the story ends well for other countries too.
“The Asian crisis of 1997-98 is a very important example,” he said.
The CEA said, "While we are proud of the fact that we have the world's largest trading volume in futures and options (F&O), we need to ask ourselves whether this is a sign of progress or a sign of concern. "
He said the financial sector has a responsibility to ensure that capital markets grow in areas where we can actually utilize Indian domestic savings for productive purposes.Nageswaran said, "Many people currently engaged in the market do not understand them... The sanctity of futures and options is something that we need to rethink because the financial literacy required to trade stocks is much less than that of futures and options trading. It's very different."
Sachetization refers to the process of making financial products and services available in smaller, more manageable packets.
According to government data, net household savings declined sharply by Rs 9 lakh crore in three years to Rs 14.16 lakh crore at the end of fiscal year 2022-23.
Investments in mutual funds almost tripled in three years to Rs 1.7 lakh crore in 2022-23 from Rs 64,084 crore in 2020-21, the data showed. Domestic investment in shares and debentures almost doubled from Rs 1.07 lakh crore in the three years from 2020-21 to Rs 2.06 lakh crore in 2022-23.Finance Minister Nirmala Sitharaman earlier this week cautioned against an "uncontrolled explosion" in retail F&O trading, saying it could potentially create problems for household finances.
“Home finance has undergone a generational shift. We want to protect them, he had said, while urging the NSE, BSE and market regulator Securities and Exchange Board of India (SEBI) to work together and come up with stronger compliance and regulatory standards to protect the interests of investors. Sitharaman had said.
In November last year, Sebi chairperson Madhabi Puri Buch had said she was "confused and surprised" at investors' interest in F&O trading, despite 90 per cent losing money in the segment.
Buch said investors need to focus on the long term and said the chances of achieving inflation-beating returns through this strategy are much better.According to research by capital markets regulator SEBI last year, only 11 per cent of the 45.24 lakh individual traders in the F&O segment made profits.
F&O segment participation increased rapidly during the pandemic, with the total number of unique individual traders increasing by over 500 per cent from 7.1 lakh in FY19.
Speaking at CII's Annual Business Summit, 2024, Nageswaran said whenever financial sector development precedes national development the story ends well for other countries too.
“The Asian crisis of 1997-98 is a very important example,” he said.
The CEA said, "While we are proud of the fact that we have the world's largest trading volume in futures and options (F&O), we need to ask ourselves whether this is a sign of progress or a sign of concern. "
He said the financial sector has a responsibility to ensure that capital markets grow in areas where we can actually utilize Indian domestic savings for productive purposes.Nageswaran said, "Many people currently engaged in the market do not understand them... The sanctity of futures and options is something that we need to rethink because the financial literacy required to trade stocks is much less than that of futures and options trading. It's very different."
Sachetization refers to the process of making financial products and services available in smaller, more manageable packets.
According to government data, net household savings declined sharply by Rs 9 lakh crore in three years to Rs 14.16 lakh crore at the end of fiscal year 2022-23.
Investments in mutual funds almost tripled in three years to Rs 1.7 lakh crore in 2022-23 from Rs 64,084 crore in 2020-21, the data showed. Domestic investment in shares and debentures almost doubled from Rs 1.07 lakh crore in the three years from 2020-21 to Rs 2.06 lakh crore in 2022-23.Finance Minister Nirmala Sitharaman earlier this week cautioned against an "uncontrolled explosion" in retail F&O trading, saying it could potentially create problems for household finances.
“Home finance has undergone a generational shift. We want to protect them, he had said, while urging the NSE, BSE and market regulator Securities and Exchange Board of India (SEBI) to work together and come up with stronger compliance and regulatory standards to protect the interests of investors. Sitharaman had said.
In November last year, Sebi chairperson Madhabi Puri Buch had said she was "confused and surprised" at investors' interest in F&O trading, despite 90 per cent losing money in the segment.
Buch said investors need to focus on the long term and said the chances of achieving inflation-beating returns through this strategy are much better.According to research by capital markets regulator SEBI last year, only 11 per cent of the 45.24 lakh individual traders in the F&O segment made profits.
F&O segment participation increased rapidly during the pandemic, with the total number of unique individual traders increasing by over 500 per cent from 7.1 lakh in FY19.
