Retail participation in F&O down 20% in FY26 as SEBI tightens regulations, aggregate losses fall 18%: Finance Ministry

Retail participation in India’s equity derivatives market declined sharply in FY26 following a series of regulatory measures by SEBI, but the average loss per individual trader increased even as aggregate losses fell, according to a Rajya Sabha reply by the Finance Ministry.

Fewer traders, but loss per person rises

Data cited by the government showed the number of individual F&O traders falling to 78.6 lakh in FY26 from 98.1 lakh in FY25, a decline of around 20%.

At the same time, aggregate net losses incurred by individual traders declined to ₹91,685 crore in FY26, from ₹1,11,788 crore a year earlier — an improvement of about 18%.

However, the decline in aggregate losses did not translate into lower losses for the average trader. Average loss per person increased to ₹1,16,654 in FY26 from ₹1,13,913 in FY25.

The government said the data comes from SEBI's analysis based on information collected from the top 15 brokers, with the sample representing approximately 90% of all individual investors in the equity derivatives segment.

“Following the regulatory measures, SEBI has observed a year-on-year decline in the number of unique individual investors from 98.10 lakhs to 78.60 lakhs,” the government said.

F&O turnover remains above ₹200 lakh crore

Despite the decline in participation, trading activity remained substantial. Total F&O turnover stood at ₹202 lakh crore in FY26, compared with ₹213 lakh crore in FY25.

The five-year data shows how dramatically retail participation had expanded before the recent regulatory intervention. Traders increased from 42.74 lakh in FY22 to a peak of 98.1 lakh in FY25, while turnover rose from ₹115 lakh crore to ₹213 lakh crore during the same period.

SEBI has introduced several measures since November 2024, including rationalising weekly index derivatives products, increasing tail-risk coverage on expiry days, raising contract sizes for index derivatives and introducing upfront collection of option premiums from buyers.

F&O STT collections more than quadruple

While retail participation and aggregate losses declined in FY26, the government data shows a very different trend in tax collections.

Securities transaction tax (STT) from F&O trades jumped to ₹27,695 crore in FY26, from ₹6,634 crore in FY22. Options accounted for ₹19,802 crore of the FY26 collection, while futures contributed ₹7,893 crore.

The Finance Ministry said STT is a “technology driven, intermediary-based collection mechanism” with automatic tax collection embedded into the regulated market infrastructure, which it said materially curbs opportunities for tax evasion.

Interestingly, the government also said SEBI has not examined the impact of algorithmic and high-frequency trading on market fairness and retail investors.

The data therefore presents a mixed picture: SEBI's measures have coincided with a sharp reduction in retail participation and aggregate losses, but those continuing to trade F&O are still losing more than ₹1 lakh per person on average.