Adani-Hindenburg Row: SEBI Can Regulate F&O Exposure But Won't Restrict Access, Says JN Gupta

India has enough regulations in place to check significant disruptions in the market, JN Gupta, managing director of Stakeholder Empowerment Services, said while referring to SEBI's role in the Adani-Hindenburg case.

"When my company releases a report, I have to abide by the law, I am abiding by what SEBI says," Gupta told BQ Prime in an interview. "Unfortunately, in a situation like this when Hindenburg issues a report, none of the SEBI laws apply, so SEBI is unable to take any action against a person."

According to Gupta, the regulator would warn investors of the risks associated with the markets instead of actively shielding them or limiting access to the market.

"I don't think SEBI will ever say that my intention is to limit the losses for retail [investors] or anybody," he said. "SEBI will always say that this is the risk and you should be aware of the risk."

If the Securities and Exchange Board of India has permitted futures and options market, then they cannot shut the F&O market. They can only make rules of what should be the exposure limit, according to Gupta.

He highlighted that SEBI is already trying to educate investors about the F&O market. The segment has seen growing retail participation in recent times, with up to 90% participants losing money.

On the impact of the Hindenburg Research's report on retail investors, Gupta said it is part and parcel of the equity market, which is volatile in nature.

However, he said the risk and the volatility in this particular case was enhanced because of the Hindenburg report. "Secondly, the support the Hindenburg (report) found from unexpected quarters," Gupta said. "And that is where I am very much concerned."

"Hindenburg was not wrong because they said that my aim is to make money by this, they were transparent," he said. "But people who got trapped in India and who supported Hindenburg without knowing Hindenburg's intentions, they are the people who should introspect and see what loss they have caused to their own constituency."

A recent report by a Supreme Court panel said that the Adani Group does not pose any systemic risk. It said foreign portfolio investors in the Adani Group stocks are compliant with SEBI regulations and there has been no regulatory failure in the Adani-Hindenburg case.

Disclaimer: AMG Media Networks Ltd., a subsidiary of Adani Enterprises Ltd., holds 49% stake in Quintillion Business Media Ltd., the owner of BQ Prime.