MFs pitch for bigger play in F&O market

Tell Sebi they are better placed to counter high-frequency traders

- JOYDEEP GHOSH

ASSET MANAGEMENT COMPANIES (AMCs) want to participate more aggressively in the futures and options (F&O), as they believe they are in a better position to counter high-frequency traders (HFT), mostly dominated by foreign institutional investors, said sources close to the development.

In a recent meeting with senior officials of the Securities and Exchange Board of India (Sebi), fund houses made a strong pitch for the same, adding that the main reason behind individual investors losing big money in the F&O market is that they are pitted against institutional HFTs. "Retail investors are in no position to take on big foreign institutions. No wonder, over 90% of them lose money," said one of the sources.

According to data from Sebi, retail investors have consistently been losing money in the derivatives market, with 93% of them incurring an average loss of ₹2 lakh. The combined net loss stood at ₹1.81 trillion during the last three financial years (FY22-FY24).

Currently, fund houses face restrictions while investing in the derivatives market whereas retail investors have a free hand, the source said.