The Securities and Exchange Board of India (Sebi) is discussing with brokers ways to refine futures and options (F&O) risk warnings on trading platforms as retail losses in the segment remain high, according to reports from Mint. "The aim is to make the warnings more dynamic, rather than a simple warning that remains the same all the time. Such a warning is expected to attract more retail attention and ensure people are careful before they trade in the segment," said one official on condition of anonymity. The regulator is considering making warnings more dynamic by updating information on loss-making individual traders more frequently and providing templates for what warnings should look like.
According to Sebi's study released on 20 August 2025, total losses among individual equity derivatives traders stood at ₹91,685 crore in FY26, marginally lower than ₹1.12 trillion in FY25. However, the average loss per trader increased 2% to ₹1.17 lakh from ₹1.13 lakh a year ago. The share of individual traders who lost money also remained elevated, with 87.7% of individual traders incurring losses while trading in the derivatives segment in FY26, compared with 90.9% in FY25. As reported by Mint, the number of individual traders participating in derivatives declined for the first time since FY16, with about 8.77 million individual traders participating in FY26, down 18% from the previous fiscal.
Most of the declining traders were options buyers, with 93% of individual traders classified as 'only options buyers' and another 4% as 'majorly options buyers' in FY26. According to the Sebi study, about 90% of 'only options buyers' and 75% of 'majorly options buyers' incurred losses. The regulator found that about 90% of 'only options buyers' and 75% of 'majorly options buyers' incurred losses, highlighting the high-risk nature of options trading among retail participants.
Market participants expressed skepticism about the effectiveness of dynamic warnings, as reported by Mint. "Putting dynamic warnings on apps may not discourage traders from engaging in the F&O segment. A warning on a cigarette packet saying that smoking is injurious does not discourage people from smoking. Similarly, such warnings may not make a material change for individual traders," said a second official on condition of anonymity. Despite Sebi's introduction of measures including tripling the minimum contract size, permitting one weekly contract per exchange, and doubling the extreme loss margin on contract expiry days, along with the government increasing securities transaction tax on derivatives in April 2026, regulatory measures and higher transaction costs have not substantially eliminated retail trader losses.
