He is exactly who SEBI's data describes - a man in his late twenties, working a modest job in a tier-2 town, earning under 5 lakh a year. He has seen the risk disclosure banner on his trading app more times than he can count. Tonight, like most nights, he opens it anyway and places another Nifty options bet.

When a Warning Isn't Protection

SEBI has done what regulators are supposed to do: it studied the problem, published the numbers and told people the truth. Over 90% of individual F&O traders lose money. Aggregate retail losses have crossed 2.8 lakh crore over four years.

And within that group, the pain is not evenly spread - roughly 4 lakh traders, the most persistent 3.5%, are absorbing average losses of 28 lakh each, sustained year after year even as they keep losing.

The Case That Disclosure Is Working As Intended

SEBI's job in a market economy is not to stop people from taking risks - it is to make sure they take those risks with full information. On that narrow test, the regulator has largely delivered: mandatory risk disclosures, hiked contract sizes, tighter margin rules and public data on how badly retail traders fare.

Every trader who opens an F&O position today does so after being told, explicitly, that the odds are stacked against them. In a country committed to individual economic freedom, that may be where regulatory responsibility should end - informed adults making informed, if unwise, choices.

The Case That This Is a Structural Failure, Not a Series of Bad Choices

But look at who is actually losing. Over 86% male, over 72% from tier-2 and tier-3 towns, over 75% earning under 5 lakh a year - this is not a random cross-section of risk-tolerant investors. It is a demographic being systematically drawn in by discount brokerages, gamified trading apps and social media "how-to-trade" content, then losing to institutional desks where 96-97% of profits come from algorithmic trading most retail participants cannot even understand exists.

Over 75% of loss-making traders keep trading after sustaining losses - a pattern that looks less like informed risk-taking and more like a behavioural trap disclosure alone cannot fix. Singapore and the US do not rely on warnings for this reason; they make brokers legally responsible for verifying that a client can actually bear the risk before letting them in.

Where This Leaves Us

TAN's position is that disclosure-based regulation has reached its limit for this specific market. The concentration of catastrophic losses among a small, demographically identifiable group - not a broad, evenly-distributed base of risk-takers - is itself evidence that something more than information asymmetry is at work.

SEBI should move to a suitability-gatekeeping model: a baseline capital threshold, a mandatory knowledge assessment before derivatives access and legal liability placed on brokers rather than on traders alone. This matters more, not less, as the NSE prepares to list - an exchange whose own valuation depends on retail F&O volume has a direct commercial incentive to keep the warnings passive.

SEBI's credibility as a regulator, not just NSE's IPO, is what is actually being tested here.