88% retail investors lost money in F&O trading in FY26: Sebi
In FY26, an alarming trend emerged in India's equity derivatives market, with nearly 90% of traders facing financial losses. Retail participation saw an unexpected decline of 18%, marking a significant shift not seen in a decade. Regulatory change...
By ET Bureau |
Reuters
The study found that 88% of individual traders incurred losses in FY26, with total net losses amounting to ₹91,685 crore.
Mumbai: Nearly nine out of 10 individual traders in India's equity derivatives market lost money in FY26, even as regulatory curbs and higher transaction costs triggered the first annual decline in retail participation in a decade, according to a Securities and Exchange Board of India (SEBI) study.
The study found that 88% of individual traders incurred losses in FY26, with total net losses amounting to ₹91,685 crore.
Individual participation in the equity derivatives segment fell 18% to 88 lakh traders in FY26 from one crore in FY25-the first year-on-year decline in the trader base since FY16. New entrants fell about 40% to 21 lakh, while exits surged, with nearly 46 lakh traders who participated in FY25 staying away from the market in FY26.
The decline followed a series of measures introduced by Sebi from November 2024 to curb excessive speculation in short-dated index options. The regulator restricted weekly expiries to one index per exchange, raised minimum contract sizes, tightened margin requirements and mandated upfront collection of options premium. The government also raised the securities transaction tax on equity derivatives.
Sebi said participation fell more sharply in options than futures after the measures, though it cautioned that the study does not establish a direct causal relationship.
The regulator said trading remained highly concentrated in contracts close to expiry. About 59% of index options turnover occurred in contracts expiring on the same day (0DTE), around 75% within one day of expiry and 97% within one week of expiry.
Read more: F&O trading bill: Retail traders pay Rs 25,000 crore transaction costs in FY26 despite big losses
The study also pointed to disproportionate risks for smaller investors. About 35% of derivatives traders had no underlying equity portfolio, while 78% had portfolios worth less than ₹1 lakh. These small-portfolio traders accounted for 70% of total losses during FY25-FY26.
Traders below the age of 30 accounted for 43% of individual derivatives traders, with 89% of them incurring losses. Those earning below ₹5 lakh annually accounted for 53% of aggregate losses despite generating 43% of turnover.
The study found that 88% of individual traders incurred losses in FY26, with total net losses amounting to ₹91,685 crore.
Individual participation in the equity derivatives segment fell 18% to 88 lakh traders in FY26 from one crore in FY25-the first year-on-year decline in the trader base since FY16. New entrants fell about 40% to 21 lakh, while exits surged, with nearly 46 lakh traders who participated in FY25 staying away from the market in FY26.
The decline followed a series of measures introduced by Sebi from November 2024 to curb excessive speculation in short-dated index options. The regulator restricted weekly expiries to one index per exchange, raised minimum contract sizes, tightened margin requirements and mandated upfront collection of options premium. The government also raised the securities transaction tax on equity derivatives.
Sebi said participation fell more sharply in options than futures after the measures, though it cautioned that the study does not establish a direct causal relationship.
The regulator said trading remained highly concentrated in contracts close to expiry. About 59% of index options turnover occurred in contracts expiring on the same day (0DTE), around 75% within one day of expiry and 97% within one week of expiry.
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Read more: F&O trading bill: Retail traders pay Rs 25,000 crore transaction costs in FY26 despite big losses
The study also pointed to disproportionate risks for smaller investors. About 35% of derivatives traders had no underlying equity portfolio, while 78% had portfolios worth less than ₹1 lakh. These small-portfolio traders accounted for 70% of total losses during FY25-FY26.
Traders below the age of 30 accounted for 43% of individual derivatives traders, with 89% of them incurring losses. Those earning below ₹5 lakh annually accounted for 53% of aggregate losses despite generating 43% of turnover.
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