Mumbai, Aug. 21 -- ​The Securities and Exchange Board of India (Sebi) may consider rolling out a product suitability framework to ensure that only informed and capable investors participate in complex derivative instruments.

The framework of checks and protocols, typically implemented by brokers and intermediaries, matches financial products with an investor's risk appetite, investment experience, financial capacity, and objectives. In effect, it aims to ensure that investors, especially retail clients, are not exposed to risks they do not understand or cannot absorb.

The initiative may involve vetting clients' profiles, assessing their risk appetite, providing enhanced risk disclosures, and restricting access to risky products if...