Equity derivatives turnover witnessed a dramatic 22% month-on-month decline in August, falling to a historic low of ₹192 lakh crore according to latest Bloomberg data. This represents the sharpest monthly decline since December 2024, when exchanges were grappling with tighter derivatives trading norms. NSE's average daily derivatives turnover fell below ₹200 lakh crore for the first time in 18 months, marking a significant milestone as the exchange had previously reached a record ₹408 lakh crore in February 2024. The NSE's futures and options ADTV fell to ₹193.3 trillion in August from ₹214.3 trillion in July, while BSE's F&O ADTV declined more sharply to ₹153.6 trillion from ₹232.2 trillion over the same period. The NSE's total monthly equity derivative turnover fell to ₹34.48 lakh crore, marking the lowest level since November 2023, while BSE's August turnover stood at ₹32.2 crore, representing the lowest since June 2025.
The Closing Auction Session (CAS) reforms, introduced by the Securities and Exchange Board of India (SEBI) in August 2025, are creating significant operational challenges for market participants. According to The Economic Times, CAS operates as a separate 20-minute session from 3:15 pm to 3:35 pm, during which the exchange collects buy and sell orders before matching them to determine a single official closing price. This system has fundamentally altered trading dynamics, with brokers squaring off positions earlier by 3:05-3:10 and traders closing positions early to avoid heightened volatility. As reported by Palviya, the early closure of the cash market also limits arbitrageurs and jobbers from executing delta-hedging strategies across cash, futures and options, particularly affecting those who operate on thin margins. According to Jefferies, the new closing-auction mechanism has negative implications for exchanges and brokers such as Groww as options turnover declines, with average daily turnover for index options premium falling to ₹539 billion in August, the lowest since February 2025.
The dramatic volume decline reflects the cumulative impact of multiple regulatory measures introduced by SEBI since late 2024 to curb excessive speculative activity. The regulator has implemented increasing contract sizes and limiting index expiries to a single benchmark index expiry per exchange per week. SEBI also tightened rules around short-term speculative trading by limiting the number of weekly index-option expiries to two, down from as many as eight earlier. These changes have reduced opportunities for quick-turnaround trades, particularly those involving aggressive position-building on expiry days to profit from sharp price swings. The average daily turnover of ₹263 lakh crore in the first seven months of 2026 compares sharply with the ₹192 lakh crore in August, highlighting the sustained impact of regulatory tightening on derivatives activity.
Despite the August decline, analysts are now seeing a revival in volumes as the impact of CAS stabilises. According to market data, BSE volume is showing recovery after the CAS impact, with turnover on the first two days of September 13-15% higher versus the first two days of July and August 2026. The Tuesday premium (September 1) volume of BSE at ₹117.5 billion is the best Tuesday over the last 13 weeks on Tuesdays, the expiry days. This recovery contrasts with the cash market, where activity held broadly steady with NSE's average daily cash turnover at ₹1.19 trillion in August against ₹1.20 trillion in July, while BSE's cash ADTV rose marginally to ₹10,591 crore from ₹9,870 crore. The NSE remains the world's largest derivatives exchange by number of contracts and commands a dominant share of India's equity-derivatives market, positioning it as a key indicator of broader market sentiment.
