Written by Hitesh VyasMumbai | October 7, 2025 02:21 AM IST 3 min read(Second from right) SEBI Chairman Tuhin Kanta Pandey at the World Investor Week 2025 event on Monday (X/@NSEIndia)Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey on Monday said that retail investors often incur losses in derivatives market, and therefore should evaluate their risks and avoid speculative trading.“SEBI studies have consistently shown that retail investors trading in derivatives end up facing losses, often because they do not fully understand the risk in these products,” Pandey said at a World Investor Week 2025 event.“Derivatives are meant for hedging and risk management, not for quick gains. Retail investors should therefore assess their risk capacity, learn how these contracts work, and avoid speculative trades,” he said.Story continues below this adIndividuals should examine whether they seek to build long-term wealth or want to engage in speculative, short-term trading, Pandey said.SEBI has been warning retail investors against participating in the derivatives market as many of them have made heavy losses.A recent study conducted by SEBI showed that In FY25, retail traders lost a record Rs 1.06 lakh crore, a 41 per cent jump from Rs 74,812 crore the previous year. A massive 91 per cent of individual traders suffered net losses, a figure that has barely changed year-over-year.This data was from an analysis of 96 lakh traders registered with the country’s top 13 brokers. Interestingly, retail participation had fallen sharply — from 61.4 lakh in Q1 to just 42.7 lakh in Q4 of FY25 — after SEBI introduced tighter rules in November 2024 to curb speculative excesses.Story continues below this adAnother SEBI study conducted in 2023 revealed that as many as 89 per cent of the individual traders — 9 out of 10 individual traders — in the equity F&O segment incurred losses with an average loss of Rs 1.1 lakh during FY22.The Sebi chairman further noted that while digital infrastructure has brought the markets to one’s fingertips, it has also armed fraudsters with new tools to deceive investors.“Unsolicited messages on messaging applications, dubious ‘finfluencers’, and fake trading apps/ websites promise the one thing that our markets can never offer – Guaranteed Returns,” he said.This, according to him, is a challenging proposition for a nation where nearly 80 per cent of households are fundamentally risk-averse and prioritize capital preservation. Fraudsters exploit this by creating a false sense of security, luring cautious savers into high-risk schemes disguised as safe investments, Pandey said.Story continues below this adHe said that SEBI has deployed various measures to fight digital-age fraud. In the last 18 months, more than one lakh unlawful or misleading content have been removed from social media platforms.Stay updated with the latest - Click here to follow us on Instagram© The Indian Express Pvt LtdTags:Sebi