Retail investors should stay away from F&O trading; extended hours will be for professionals: NSE CEO

Ashish Kumar Chauhan said investment is when you buy a share after studying a company, industry and macro-economy for a horizon of 3-5 years.

Ashish Kumar Chauhan, MD and CEO at NSE on Thursday said retail investors should ideally not trade derivatives. At India Today Conclave Mumbai 2023, Chauhan said if anyone has to trade, s/he has to be an expert. A Sebi study in the past suggested nine of the ten traders lose money in derivatives trades. Chauhan was asked about the rationale for NSE seeking longer trading hours in the futures & options segment, which is being reviewed by the markets regulator Sebi. 

Making a distinction between investing and trading, Chauhan said investing is when you buy a share after studying a company’s prospects, industry and macro-economy for a horizon of say 3-5 years. “If you want to buy in the morning and sell in the afternoon and you call yourself investor, then you understood the dictionary wrong. It’s trading, speculation,” Chauhan said.   

Chauhan said many young traders want to trade derivatives because that gives much more leverage and moves fast. Small investors, he said, should not undertake F&O trades.

“Having said that, longer hours are, for the sake, in case a news come in, as we only trade 6 hours and the rest of the world works 24×7. News do not come in domestic market hours only,” Chauhan said.

Chauhan explained that foreign investors investing in Indian securities have a choice, as Indian products are traded abroad as well and, therefore, they are able to hedge. Indian investors can’t.  If some people are losing money in some ways, the idea is to take them out from that market, he said.

“Strategically, no country will allow its most important asset — $3.8 trillion is one out of every three rupees that India considers as wealth, to work like that. If the pricing of the asset is done under some other regulator in 18 out of 24 hours, we are having a strategic problem.” 

Professional traders or hedgers can actually use that news information coming in, to take positions, he said adding that extended trading would the allow the domestic regulator to control the market better. People need not have to be there on the screen every moment, he insisted.  

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