The Securities and Exchange Board of India (Sebi) has sought the latest quarterly profit-and-loss statements of clients from top brokers to assess the full-year financial impact of equity derivatives trading on individual investors. According to reports from Mint, the regulator had directed brokers to submit the data sometime last week, specifically requesting January-March data of the previous fiscal year to provide a comprehensive view of full-year P&L. This represents a shift from the previous practice of submitting Q1-Q3 data after each quarter's end.
Alarmed by losses of individuals trading in the equity derivatives segment, Sebi has been requisitioning quarterly P&L data from the top 10 equity brokers whose clients account for 90% of the derivatives volumes on NSE and BSE. As reported by Mint, the regulator had used this data for two studies—one in September 2024 and the other in July last year—to analyse the P&L of individual traders from FY22 through FY25. The studies revealed that individual or retail traders suffered rising losses during this period, with lakhs of retail traders suffering losses of ₹1.05 trillion in FY25, up 41% from the preceding fiscal year.
The latest quarterly data could provide Sebi with the full picture of P&L for FY26 and help assess the impact of various measures undertaken in late FY25 and FY26 on trading volumes and retail participation. According to Rajesh Palviya, senior vice president (derivatives & technical research) at Axis Securities as reported by Mint, if retail losses remained elevated, the regulator could consider implementing a product suitability framework (PSF) for participation in derivatives trading. The framework could potentially use income or awareness criteria as the basis for allowing individuals to trade on EDS, with those below an income threshold being barred from EDS trading.
Sebi has implemented several measures since November 2024 to curb derivatives frenzy, including tripling contract size, rationalizing weekly option expiries to one per exchange, changing open interest calculation methods, and introducing a gross ₹10,000 crore per day limit for EDS participants. However, according to Mint reports, the combined premium turnover of NSE and BSE in index options, the most popular EDS product, remained 9% higher at ₹173.21 trillion due to volatile indices caused by Trump's tariffs and the Iran war. Top brokers by client numbers include Groww, Zerodha, Angel One, ICICI Securities, HDFC Securities, Kotak Securities, and SBI Cap Securities.
