Investor education could be the key to managing the losses in derivatives trade.

BSE managing director and CEO Sundararaman Ramamurthy on Saturday said there could be a lack of understanding among investors about derivative products such as futures and options.

“People may be trading options not because they know about them but because somebody has told them options can make money,” Ramamurthy said at YiFi 2024 organised by Young Indians on Saturday.

A study by Sebi shows 89 per cent of individual trades (9 out of 10 individual traders) in equity futures and options segment have incurred losses, with an average loss of ₹1.1 lakh during FY22. At its board meeting on Thursday, Sebi approved stricter norms for entry and exit of individual stocks in this segment.

Ramamurthy said that besides conducting webinars and providing statutory warnings, more work can be done towards raising investor awareness. There are already some regulatory checks in place like real time client level portfolio-based margining or risk reduction modes where if some broker has utilised 90 per cent of capital he cannot take further positions, but can only reduce positions.