New Delhi, May 19 (PTI) To facilitate informed decision making by investors, markets regulator Sebi on Friday decided to introduce risk disclosure framework for individual traders with respect to trading in the equity Futures & Options (F&O) segment.

The new framework would come into force from July 1, the Securities and Exchange Board of India (Sebi) said in a circular.

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Under the new framework, all stock brokers will have to display the risk disclosures on their websites and also inform all their clients in the specified manner.

Upon login into their trading accounts with brokers, the clients may be prompted to read the 'risk disclosures' -- which may appear as a pop-up window -- and would be allowed to proceed ahead only after acknowledging the same.

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Further, such disclosures should be displayed prominently, covering at least 50 per cent area of the screen.

Sebi noted that there has been increased participation of investors in the Indian securities market, including in the derivatives segment.

"While investors are expected to make investment decisions based on their own due diligence and risk appetite, it is important to empower them with detailed information about the risks associated with trading in derivatives," it added.

In addition, all Qualified Stock Brokers (QSBs) have been directed to maintain the Profit and Loss (P&L) data of their clients on continuous basis. Such data of the clients need to be retained for at least five years.

The stock exchanges and depositories have been directed to display the risk disclosures on their respective websites, with a link to a study conducted by Sebi.

In the study conducted by Sebi in January, it was revealed that 9 out of 10 individual traders in equity F&O segment incurred net losses in financial year 2021-22, with an average loss of Rs 1.1 lakh.

On the other hand, only 11 per cent of individual traders in the equity F&O segment made a profit, with an average profit of Rs 1.5 lakh in FY22.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)