The Securities and Exchange Board of India (Sebi) is preparing another comprehensive study on India's derivatives market, with Sebi chairman Tuhin Kanta Pandey announcing the release is expected in July during a press conference following the regulator's board meeting on Friday. According to reports from Mint, the study is currently undergoing analysis of individual traders' profit-and-loss outcomes in equity derivatives, building on earlier studies that have consistently documented rising retail losses.
Despite a slew of regulatory measures to curb unbridled retail speculation, losses incurred by individual traders in equity derivatives are likely to have remained elevated in fiscal year 2026 (FY26). Top brokers who submitted client profit and loss data on equity derivatives say that while the count of smaller investors could have fallen due to regulatory tightening, overall losses would be similar to last fiscal year's ₹1.05 trillion. An official from one of the country's top 10 brokers who submitted data to Sebi in April stated that "there is some reduction in the client count for sure, but the quantum of losses incurred by individuals at our brokerage in FY26 was similar to what we recorded in the previous fiscal."
NSE data reveals significant changes in market participation patterns despite continued losses. The number of all investors trading equity options fell to 3.37 million in FY26 from 4.15 million in the previous fiscal year, thanks to Sebi's regulatory measures. However, individual share in index options premium turnover stood at 39% in FY26, up from 35.7% in FY25, indicating that while participation may have decreased, trading intensity among remaining participants has increased. The data shows small investors trading up to ₹10,000 declined to 450,000 from 780,000, while those trading between ₹10,000 and ₹1 lakh fell to 800,000 from 1.07 million.
In response to mounting retail losses, Sebi has implemented a comprehensive series of measures since November 2024 to curb excessive speculation. As reported by Mint, these measures include tripling the minimum contract size, restricting weekly options expiries to one per exchange, revising the methodology for calculating open interest to better capture market risk, and imposing a gross daily exposure limit of ₹10,000 crore for equity derivatives segment participants. These measures represent the regulator's systematic approach to addressing the persistent retail losses in the derivatives market.
Industry experts provide mixed perspectives on the effectiveness of regulatory measures. Rajesh Palviya from Axis Securities noted that "the count of smaller individual traders has probably reduced because of the regulatory actions, but the losses would roughly be the same as derivatives are a zero-sum game." However, another broker questioned the regulatory methodology, with Ketan Marwadi from Marwadi Share & Finance suggesting that "analysing the comparative performance of the same individual across the cash, mutual fund and futures segments would reveal the correct picture of losses." A bank-backed broker reported seeing a 10% reduction in losses incurred by retail investors on their platform, though this remains a minority view among industry participants.
