SEBI sees dip in derivatives turnover, 91% of retail traders lose money in FY25

The Securities and Exchange Board of India (SEBI) has released a comparative analysis of trading activity in the Equity Derivatives Segment (EDS) versus the cash market, following a series of regulatory measures introduced last October to tighten the equity index derivatives framework.

The study, covering the period from December 2024 to May 2025, was conducted in response to recent media reports questioning the impact of the new measures. According to SEBI, index options turnover has declined by 9% in premium terms and 29% in notional terms compared to the same period last year. However, when measured against data from two years ago, trading volumes still show significant growth, up 14% in premium and 42% in notional terms.

For individual traders specifically, turnover in premium terms has fallen 11% year-on-year, but remains 36% higher compared to the same period two years ago. The number of unique retail participants in the derivatives segment has also seen a 20% drop from last year, although it is still 24% higher than two years ago. SEBI noted that despite the recent moderation, India continues to witness unusually high levels of trading activity in index options when compared to other global markets.

The regulator also released a sobering statistic: nearly 91% of individual traders in the derivatives segment incurred net losses in FY25, a trend consistent with FY24. This revelation, SEBI said, underscores the importance of continued monitoring and regulatory oversight to safeguard investor interests and ensure market stability.

To that end, SEBI introduced additional risk-monitoring measures through a circular issued on May 29, 2025. These steps are aimed at improving risk disclosures in derivatives trading, preventing artificial ban periods in single-stock derivatives, and strengthening oversight against concentration and manipulation in index options.

SEBI confirmed that it will continue observing turnover trends in the derivatives segment and take further steps if necessary to balance market growth with investor protection.

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