SEBI chairperson Madhabi Puri Buch said on Monday that she was surprised that so many people continued to trade in F&O despite knowing that the odds were not in their favour.

The regulator’s study earlier this year suggested that nine out of 10 individual traders in the equity F&O segment incur net losses. On average, loss makers registered net trading loss close to ₹50,000 in FY22.

“There is a 90 per cent chance that the investor will lose money in the F&O segment. But if you take a long-term view and invest with a long-term perspective, you will rarely go wrong. There is a really good chance that you will be creating wealth for yourself and your family over a sustained period that will exceed the inflation rate,” said Buch.

Speaking during the launch of the Investor Risk Reduction Access (IRRA) platform at Asia’s oldest stock bourse BSE in Mumbai, Buch said that despite teething troubles, much of the operational challenges faced by brokers in implementing the upstreaming circular were pretty much resolved. Upstreaming requires client funds from stock brokers and clearing members to be sent to clearing corporations daily. “I am told that the consensus around this issue was so good and quick that now a list of 50 items has been submitted (to the Industry Standards Forum) for consideration. I believe that significant progress has been made on most of the 50 items,” Buch said.

IRRA platform launched

Buch officially launched the IRRA platform on Monday which can be invoked by trading members faced with a technical glitch at their end impacting their ability to service clients across exchanges from both the Primary site and the Disaster Recovery site.

On invocation, after basic checks, the platform downloads trades of the Trading Member from all the trading venues and sends SMS/email to investors using internet trading or wireless technology along with a link to access IRRA. Investors using this link can review status of their investment, orders etc., and place orders for squaring off or closing positions.

IRRA is not available for algo trading and Institutional clients. “We see it as a safety net, which is available so that people invest with confidence. This is really important for people who are regular, frequent traders, where the downtime of a broker even of a few hours or few days is very material to them, and if they have open positions, they are exposed to risk,” said Buch.

She added that the probability of several brokers going down at the same time was low and the hope is that this is a system that will not be required to be used. “The system is designed for risk reduction and not for fresh position taking or orders but to cancel the pending orders. So, the kind of volumes that we would expect coming through the system, we feel confident that the systems that have been built will be capable of handling that,” Buch said.