Sebi, brokers to discuss retail participation

Securities and Exchange Board of India (Sebi) chairman UK Sinha will meet stock market brokers on Thursday to discuss methods to improve retail participation in the capital markets, especially in derivatives segment. The meeting will be attended by representatives of the BSE Brokers’ Forum and the Association of National Exchanges Members, sources told FE.

This meeting is a part of the regulator’s effort to increase penetration of capital markets in the country. The same issue was discussed in the annual brainstorming session of Sebi held from April 6-8 at Lonavala.

“Direct participation of retail investors has reduced significantly in the last three years as they are preferring to participate in the capital markets through mutual fund route. Even though derivatives market is about ten times the size of equity markets in terms of volumes, the retail participation in the segment is very limited,” said a representative of BSE Brokers Forum.

However, making derivative products more popular among retail investors is a challenge since their trading involves higher degree of understanding and risk management, market participants said.

“Sebi needs to adopt a procedure that would first increase the awareness levels of the investors. It also needs to simplify the KYC procedure so that opening a Demat account becomes easier for a common man,” a broker said on condition of anonymity.

Securities and Exchange Board of India ( SEBI )