While the frenzy mimics Wall Street, trading in derivatives has outstripped the underlying stock market more than in any other country. Intervention is needed.
Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services in Asia. Previously, he worked for Reuters, the Straits Times and Bloomberg News.
Hot market.
Photographer: Atul Loke/BloombergAn uncontrolled popular urge to speculate in financial markets is giving regulators a headache everywhere. It is especially worrying in India, where trading in futures and options is now more than 400 times bigger than the underlying cash-market turnover. This is a slow transfer of wealth from the real economy to a financial elite, the full impact of which may only be felt when it’s too late to stop it.
The Securities and Exchange Board of India’s crackdown on social-media influencers peddling advice is a losing battle. Although nine out of 10 individual traders are losing money, retail investors can’t get enough of derivatives. A smartphone-led gamification of investing is complete.
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