Mumbai, Nov 6 (PTI) Finance Minister Nirmala Sitharaman on Thursday said the government cannot restrain retailers from trading in Futures and Options (F&O) but will definitely create awareness regarding the risks involved in putting money in such instruments.

The statement comes days after Sebi chairman Tuhin Kanta Pandey ruled out shuttering the weekly derivatives contracts in Nifty and Sensex.

Responding to a question on the government's stance on the F&O segment, wherein retailers lose significant amount of money, Sitharaman said that the government "is not not here to shut the door on F&O trading but it can make aware people about the risks involved in the derivatives.

At the same time, investors have the responsibility to understand the risks involved, she said while speaking at the SBI Banking and Economics Conclave 2025.

She also sought suggestions for dealing with the issue of the retailers trading in F&O segment.

A recent Sebi study that 91 per cent of individual traders in futures and options (F&O) incurred net losses in FY25-- collectively losing over Rs 1 lakh crore-- funds that could otherwise contribute to responsible investing and capital formation.

The Securities and Exchange Board of India (Sebi) had introduced measures in November last year in a bid to curb excess speculation in derivatives trading.

Futures contracts obligate the buyer and seller to transact at a predetermined future date and price, while options give the holder the right, but not the obligation, to buy or sell the asset at a set price within a specific period.

These financial instruments are used for hedging risks, speculating on price movements, and arbitrage pricing differences. However, they come with significant risks, including leverage risk and market volatility, which can lead to substantial losses. PTI SP CS SP MR

Retail derivatives trading: government declines prohibition but will push risk awareness and measures to curb retail losses. The government will not prohibit retail participation in futures and options trading but will promote risk awareness and seek measures to address heavy retail losses. Recent regulatory steps to curb speculation and findings that a large majority of individual F&O traders incurred net losses inform a policy focused on preserving market access while mitigating retail harm from leverage and volatility.