Indian retail traders lose $9.6 billion despite tighter F&O rules

Indian retail investors lost ₹91,685 crore, about $9.6 billion, trading equity futures and options (F&O) in the year ended March 2026, even as tighter regulations drove a sharp decline in the number of people participating in the market.

Aggregate losses were about 18% lower than the ₹1.12 trillion recorded a year ago, according to Securities and Exchange Board of India data cited by the government in a written reply to the Rajya Sabha on Tuesday, 11 August.

The number of individual investors trading equity derivatives fell nearly 20% to 7.86 million in the 2025-26 financial year from 9.81 million a year earlier, Minister of State for Finance Pankaj Chaudhary told lawmakers.

But the decline in total losses masks a less encouraging trend for those who remained in the market.

The average loss per individual trader increased to ₹1,16,654 from ₹1,13,913 in the previous year, according to the government figures. That suggests much of the reduction in aggregate losses came alongside fewer people trading derivatives rather than a meaningful improvement in outcomes for the average participant.

The numbers offer one of the clearest indications yet of the effect of a regulatory campaign aimed at curbing speculative retail trading in futures and options.

Sebi began tightening the equity index derivatives market in late 2024 after rapid growth in short duration options trading raised concerns about investor protection and financial stability.

Among the measures announced in October 2024 were larger minimum contract sizes, limits on the number of weekly index derivatives products offered by exchanges, upfront collection of option premiums and tighter monitoring of positions around contract expiry.

Sebi subsequently tightened expiry day rules and risk monitoring. Under a framework issued in May 2025, exchanges were required to standardize expiry days, while weekly derivatives were restricted to one benchmark index for each exchange.

The measures have substantially reduced the number of derivatives contracts being traded.

Sebi’s 2025-26 annual report shows the volume of options contracts traded across the market fell 51.5% to 6,460 crore during the year from 13,321 crore in 2024-25.

Futures contract volumes fell 17.7%.

The regulator said the decline was possibly driven by measures including higher contract sizes, fewer weekly expiries, upfront collection of option premiums and higher securities transaction taxes.

Sebi’s annual report shows combined notional turnover in equity derivatives on the National Stock Exchange and BSE increased 4.3% during the year to ₹1,10,418 trillion.

The apparently contradictory trends reflect how contract volumes and notional values can move differently, particularly after regulators increase minimum contract sizes. Far fewer contracts can therefore be traded even while the nominal value represented by those contracts remains enormous.

Retail losses have been a concern for Sebi for several years. A regulator study published in September 2024 found that 93% of individual traders in equity F&O lost money between 2021-22 and 2023-24, with aggregate losses exceeding ₹1.8 trillion over the three years.