Retail investors continued to suffer heavy losses in futures and options (F&O) trading in FY25-26, with 7.86mn (million) individual traders collectively losing ₹91,685 crore despite a sharp decline in participation following regulatory measures introduced by the Securities and Exchange Board of India (SEBI).
The government said SEBI had observed a year-on-year (y-o-y) decline in both the number of individual investors and their trading activity following regulatory interventions introduced from November 2024.
The number of retail F&O traders fell by around 20% from 9.81mn in FY24-25 to 7.86mn in FY25-26. At the same time, total turnover declined from ₹213 lakh crore to ₹202 lakh crore.
Despite the fall in participation and aggregate losses, the increase in average loss per trader indicates that the decline in the number of participants did not translate into lower losses for those who continued to trade in the derivatives segment.
Five-Year Retail F&O Loss Picture
Data cited by the government, based on information collected from the top-15 brokers in the equity derivatives market, showed a substantial increase in retail participation and losses over the five-year period.
The sample represents about 90% of all individual investors in the segment. The figures are:
The figures show that retail participation almost doubled between FY21-22 and FY24-25 before falling sharply in FY25-26. Aggregate losses more than doubled during the same period, from ₹40,824 crore in FY21-22 to ₹91,685 crore in FY25-26.
The government clarified that the turnover figures refer to notional turnover in futures and premium turnover in options.
SEBI Tightens F&O Framework
The finance ministry said SEBI has implemented a series of regulatory and surveillance measures aimed at market stability and investor protection.
These included rationalising weekly and monthly index derivatives products, increasing contract sizes for index derivatives, strengthening tail-risk coverage on options expiry days and requiring upfront collection of option premiums from buyers.
The regulator also removed the treatment of calendar spreads on expiry days and introduced intraday monitoring of position limits.
In May 2025, SEBI introduced additional measures to streamline expiry days across exchanges while strengthening risk monitoring and disclosure requirements in the F&O segment.
The government's response indicates that these measures were followed by a reduction in both retail participation and aggregate losses.
However, the average loss among those remaining in the market increased. At ₹1,16,654 in FY25-26, it was the highest average loss recorded in the government's five-year data.
F&O Trading Also Boosts STT Collections
While retail traders suffered substantial net losses, government collections from securities transaction tax (STT) on F&O trades rose sharply.
According to Mr Chaudhary's reply, STT collections from F&O transactions increased to ₹27,695 crore, from ₹7,893 crore a year earlier.
The government response, however, did not provide a figure for revenue loss arising from tax evasion or non-compliance in F&O trading.
It also did not provide specific findings on the impact of algorithmic or high-frequency trading on market fairness and retail investors in the portion of the response supplied.
What the Data Means for Retail Investors
The latest figures underline the risks faced by individuals participating in leveraged derivatives trading. Although fewer retail investors entered or remained in the F&O segment after the regulatory changes, those who continued to participate still recorded substantial losses.
The FY25-26 data also suggests that a fall in aggregate losses alone does not necessarily indicate a corresponding improvement in outcomes for individual traders. The average loss increased even as the overall number of retail participants and aggregate losses declined.
The government's response came in reply to a question seeking details on retail participation, trading volumes, aggregate losses, average losses, debt burdens, the effectiveness of SEBI's warnings and regulatory measures, the impact of algorithmic and high-frequency trading, STT collections and possible additional safeguards for retail investors.
The response primarily cited SEBI's analysis of individual participation and profitability and listed the regulatory measures already undertaken. It did not announce a new suitability or eligibility regime for retail F&O traders in the information provided.
