Investment platform Groww on Tuesday announced the launch of new features designed to help F&O traders mitigate losses in F&O. The fintech platform said with India’s F&O market experiencing significant growth in recent years, the need for robust risk management tools has become increasingly apparent.
Groww’s new features aim to help the F&O participants protect their capital and avoid costly mistakes.
The new features are Safeguard and F&O Pause.
F&O Pause: Overtrading is a leading cause of capital erosion for most traders.
- The F&O pause feature allows traders to temporarily pause their F&O account during periods of market volatility or when they need to take a break from trading. Whenever ready, users can choose to unpause.
- This feature aims to enable users to maintain discipline and avoid costly errors due to the temptation of over-trading or revenge trading.
- While F&O pause is activated, customers can continue to invest in Mutual Funds and Stocks.
Safeguard:
- Safeguard is a risk management feature designed to act as a deterrent for F&O traders experiencing losses consistently.
- When a customer repeatedly incurs losses, they will be nudged about a potential halting of F&O trading on Groww.
- The customer would be required to provide additional information to prove suitability to continue trading on Groww. Failing which, their F&O trading account will be stopped after 30 days.
- This feature only restricts F&O activity while customers can continue to invest in Mutual Funds and Stocks.
Safe Exit
Groww recently launched a Safe Exit feature, which acts as a safety net by automatically limiting losses on F&O positions.
This feature helps traders exit their F&O positions once their loss crosses the limit set by them. Safe Exit can be beneficial during periods of high market volatility and for retail traders who want to limit their risk exposure.
Harsh Jain, Co-Founder and COO, Groww, said, “Our new F&O features are designed to help traders navigate market volatility and avoid behavioural mistakes. It is part of a constant endeavour to productise our safety instincts at a buoyant and critical moment in the journey of Indian financial markets. We are consistent in our messaging that F&O bears high risk, so not everyone should participate in it.”
India’s F&O market
India’s F&O market has witnessed a remarkable surge in recent years. According to the RBI’s Financial Stability Report released in June 2024, the equity derivatives segment noticed growing participation from traders, rising 42.8 percent to touch 95.7 lakh in the financial year 2023-24, as compared to 65 lakh in 2022-23.
Sebi, the Securities and Exchange Board of India, is keeping a close eye on F&O trading due to a recent surge in retail investor participation and the potential risks involved.
Sebi chairperson Madhabi Puri Buch recently said the capital markets regulator has anecdotal evidence of people borrowing money to place speculative bets in the derivatives segment and rued that household savings are going into such risky bets.
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