India’s securities regulator has dismissed calls for a compulsory exam for retail traders in futures and options, prioritising broader market safeguards over gatekeeping amid concerns over investor losses and regulatory overreach.
India’s markets regulator has ruled out a mandatory aptitude exam for retail investors who want to trade futures and options, even after its own study found that close to 90% of such traders lose money in the segment. According to reporting in the Economic Times and Business Standard, SEBI chair Tuhin Kanta Pandey said the idea was impractical and risked becoming regulatory overreach, while still warning that speculative excess in derivatives remains a concern. The regulator has already tightened rules for the segment and is weighing other ways to limit risky trading rather than testing investors before they enter the market.
The rejection leaves intact a long-running debate over whether retail participation in F&O should be constrained by education, experience or formal screening. In the lead article, the case for an exam is framed as a way to ensure that traders understand leverage, strategy and risk before taking positions that can produce rapid losses. Advocates argue that knowledge is already freely available through public training material and that an online test could be administered at scale, but SEBI’s latest position suggests it prefers broader market safeguards over a gatekeeping model for individual investors.
SEBI whole-time member Ananth Narayan had already signalled the regulator’s stance in March 2025, telling a media briefing after a board meeting that no test or exam was under consideration for F&O investors. That view appears to have settled the issue for now, even as the regulator continues to face pressure to address the heavy retail losses recorded in derivatives trading. The broader policy question is whether investor education alone can offset the risks of a market where leverage can magnify both gains and losses, or whether more direct restrictions will eventually be needed.
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