Sebi’s new F&O norms to hit Zerodha’s volumes, business, says cofounder Nithin Kamath

The Securities and Exchange Board of India’s (Sebi) recent measures on futures and options (F&O) trading are expected to reduce Zerodha’s overall F&O trading volumes by 60% and impact its business by nearly 30%, cofounder Nithin Kamath said.

Kamath added that after November 20, when the fresh rules will be implemented the company will decide on its pricing structure.

“As things stand, assuming that those trading weekly don't move on to trading monthly, the impact will be ~60% of overall F&O trades and ~30% of our overall orders,” Kamath wrote on X (formerly Twitter).


“I guess things will become much clearer from November 20th. We will then decide on our change in pricing structure, based on the impact on the business,” he added.

On October 1, the markets regulator announced a series of directives aimed at reducing risks for retail traders in the F&O market, acknowledging the speculative nature of index derivatives trading.

The key directives include the requirement for upfront collection of premiums from option buyers in which previously, traders were allowed to pay the premium at the end of the trading day. However, with the new rule, traders are required to pay the full premium at the time of placing an order.

Other important measures the market regulator has taken include limiting weekly index expiries to just one per exchange and increasing the minimum contract size for index derivatives, thereby making them less accessible for small retail traders.

A recent Sebi study revealed that between FY22 and FY24, 93% of retail traders in the F&O segment incurred losses, while only 1% made gains of over Rs 1 lakh annually. An earlier study by Sebi also showed that 89% of retail traders in the segment lost money between FY19 and FY22.

The number of retail traders on Dalal Street has nearly doubled from 5.1 million in FY22 to 9.6 million in FY24. This rapid increase has fuelled fears that savings are moving away from secure investments to speculative activities in the F&O segment.