SEBI mulls ‘risk factor disclosure’ on market trends

In a global first, the Securities and Exchange Board of India (Sebi) is planning to issue regular ‘risk factor disclosures’ on market trends, including surges and collapses, to help investors make right decisions by learning from the regulator’s insights, sources said.

The move, which is still in a preliminary stage of discussion, can help investors avoid a herd mentality that has been particularly witnessed during the last couple of years — starting with large-scale selloffs when the pandemic hit the world in early 2020, followed soon by a sharp surge in buying of stocks without understanding the fundamentals and largely on account of get-rich-quick stories and then subsequent losses.

Particularly of significance has been the losses suffered by investors in a large number of IPOs in the recent past and in the highly complicated futures and options segment of the capital market.