India Rules Out Ban on Retail Futures & Options Trading, Says Finance Minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman has confirmed that the Indian government has no plans to ban retail trading in futures and options (F&O). Speaking at the 12th SBI Banking and Economics Conclave 2025 in Mumbai on 6 November, she emphasised that the government is "not here to shut the door on futures and options trading" but is instead focused on removing roadblocks to enable smoother market operations.

Sitharaman highlighted the importance of investor awareness, stating it is the responsibility of investors to fully understand the risks involved in trading derivatives. She pointed out the need for increased financial literacy, with efforts underway to raise awareness at grassroots levels, including reaching out to people in every village.

The Finance Minister’s remarks come amid ongoing concerns about the risks retail investors face in the F&O market. A recent Securities and Exchange Board of India (SEBI) study revealed that 91% of retail traders experience losses in derivatives trading. Despite this, SEBI chairman Tuhin Kanta Pandey has ruled out shutting down weekly derivatives contracts in Nifty and Sensex, calling it a "sensitive subject" with many nuances.

Sitharaman also warned about the dangers of unchecked expansion in retail trading of futures and options, cautioning that it could pose challenges not only for the markets but also for investor sentiment and household finances. She emphasised the government's commitment to safeguarding the generational shift in household financial status.

The Finance Minister reiterated that rather than restricting retail participation, the government and regulators would focus on increasing financial awareness and enforcing stringent compliance standards to ensure a stable and efficient market.

The announcement was welcomed by market participants, with capital market stocks reacting positively, notably BSE Ltd. shares rising by over 35%. This stance reinforces the government’s balanced approach to market regulation amid rising retail interest in complex financial instruments.