Sebi intervention in F&O marks 20% decline in individual investors

The number of individual investors in the F&O segment has dropped by 20% to 6.7 million, with mounting losses and regulatory tightening contributing to the decline in participation

The results of the Securities and Exchange Board of India’s (Sebi’s) interventions in the futures and options (F&O) market are beginning to show. The total number of unique traders in the F&O segment has declined by 20 per cent to 6.7 million, according to a study released by Sebi. This count is for the period between December 2024 and May 2025, compared to the same period a year ago.

 

Meanwhile, individual investors’ turnover in equity derivatives has dropped by 11 per cent to ₹56,000 crore, compared to ₹62,700 crore during the same period a year earlier.

 

Traders with a total turnover of less than ₹10 lakh experienced a steeper decline. In contrast, those with trading volumes between ₹1 crore and ₹10 crore saw the least decline, at 4 per cent. 

While individual investors have hit the brakes on their derivatives bets, their net losses have widened by 41 per cent to ₹1.1 lakh (average per person) in 2024–25 (FY25), up from ₹86,728 in 2023–24.

 

An analysis of profit and loss at the aggregate level showed that nearly 91 per cent of individual traders in the derivatives segment incurred a net loss in FY25. The mounting losses may also have contributed to the drop in investor count. 

 

This is the third such study by the market regulator, prompted by concerns over the profitability of retail traders and the growing frenzy in the F&O market. Regulatory officials have consistently cautioned investors about the high risks and stakes in derivatives trading.

 

The recent changes to the F&O market took effect from November 2024. Minimum contract sizes for weekly index derivatives were increased in January, followed by a similar hike for monthly index derivatives in February. Other measures include limiting weekly index derivatives, requiring the upfront collection of option premiums from buyers, and removing calendar spread treatment on expiry day.

 

Despite these changes, Indian exchanges continue to hold top positions globally in terms of contracts traded. The average number of traded contracts is more than 4.3x higher than that of the second-ranked exchange, according to the Sebi study.

 

There has also been a decline in overall turnover in the equity derivatives segment. The average daily traded value stood at ₹2.43 trillion between December 2024 and May 2025, compared to ₹2.55 trillion during the same period a year ago. In the cash market, turnover dropped by 11 per cent to ₹1.05 trillion during this period.