Retail derivatives traders lose ₹1.05 lakh crore in FY25: Sebi

Despite the rapid growth in India's futures & options (F&O) segment,  the latest study on the space by the Securities and Exchange Board of India (Sebi) reveals a stark reality for retail investors: 9 of 10 individual traders are incurring losses. The study is based on the Top 13 stockbrokers in the F&O segment with a combined client base of around 96 lakh unique traders.

In a detailed comparative study of trading patterns between December 2024 and May 2025, Sebi highlights that individual traders lost a staggering ₹1.05 lakh crore in the equity derivatives segment (EDS), up 41% from the ₹74,812 crore lost in FY24. The average per-person loss stood at ₹1.10 lakh, with 91% of individuals ending the year in the red, broadly unchanged from the FY22-24 period.

A breakdown by quarter shows losses peaked in Q3FY25 and slightly eased in Q4FY25, possibly because of the initial impact of Sebi’s recent reforms. The consolidated losses of individual traders in EDS stood at ₹21,255 crore in Q1 FY25, which rose to ₹25,942 crore in Q2, and further to ₹33,661 crore in Q3, while it declined to ₹24,745 crore in Q4 of the last fiscal.

"During the first three quarters of FY25, the aggregate net loss across the individual traders and the average net loss per person were rising. However, it is seen that in Q4FY25, there is a reduction in the losses of individual traders—both at the aggregate as well as per person level," the report noted.

Meanwhile, the number of unique individual traders in the EDS declined significantly, from around 61.4 lakh in Q1FY25 to around 42.7 lakh in Q4FY25. This period coincides with the rollout of Sebi’s derivatives-related measures, which began on November 20, 2024.

The report highlighted that recent regulatory measures—meant to enhance market stability and investor protection—are beginning to impact the landscape, particularly in equity index derivatives.

The data showed that equity derivatives turnover dipped slightly, with index options falling 9% in premium terms and 29% in notional terms year-on-year. However, compared to two years ago, turnover is still up by 14% in premium and 42% in notional terms, showing that the market remains robust despite tightening norms.

For retail investors, trading volumes dropped 11% YoY, while the number of active traders fell 20% during the six-month window. Yet over a two-year horizon, these metrics still show double-digit growth, suggesting continued retail interest, albeit a more cautious approach.

Interestingly, while the number of retail participants fell, their average trade sizes remained stable or even increased. The highest degrowth was seen in those trading under ₹1 lakh, suggesting the exit of smaller, possibly speculative players. But bigger individual traders, having exposure of more than ₹10 crore, remained active and even saw a 14% increase in average turnover compared to two years ago.

In a bid to contain speculative spikes on expiry days and systemic risks, Sebi has introduced a series of reforms, starting with the rationalisation of weekly and monthly index derivatives in November 2024. The regulator also increased contract sizes, upfront collection of option premiums, and Intraday position limit monitoring.

The data also pointed out that India continues to see a relatively high level of trading in EDS, compared to other markets, particularly in index options. As of March 2025, Indian exchanges executed more than 4.3 times the contracts of the second-highest-ranked global exchange, underlining both the depth and volatility of the domestic F&O market.

Between FY20 and FY25, the turnover growth in overall EDS (options in premium terms) grew at a CAGR of 23%, while the average daily traded value in the cash market (CM) rose at a CAGR of 25%. Within EDS, the options segment (in premium terms) witnessed the fastest growth. The average daily premium traded recorded a CAGR of 72% for index options and 54% for single stock options over the five-year period. A similar trend was observed in notional turnover, where index options grew at a CAGR of 101% and stock options at 61%, underscoring the rapid expansion and dominance of options trading in the derivatives market.