Sebi study flags high-risk trading trend: 91% individual traders posted net losses in FY25, turnover dips after Oct 2024 curbs, but volumes still high vs two years ago
This high failure rate comes despite regulatory efforts to rein in speculative activity. Sebi's own data shows that October 2024's reforms, aimed at curbing retail exposure to index options, have not yet translated into meaningful protection for most traders, according to ANI.
'India continues to witness unusually high retail participation in equity derivatives, particularly index options, when compared with global markets,' the regulator noted.
The study, which reviewed investor behaviour from December 2024 to May 2025, was prompted by recent media commentary claiming that investor losses were easing after Sebi's tighter framework. The regulator countered those claims by publishing detailed numbers showing both the scale of participation and the extent of losses.
Volumes dip, but remain elevated
While index options turnover dropped 9% in premium terms and 29% in notional terms year-on-year, the report pointed out that volumes still remained 14% and 42% higher, respectively, than levels seen two years ago.
Among individuals specifically, premium turnover declined 11% over the past year, but is still up 36% from FY23. The number of unique retail traders in the equity derivatives segment has also fallen 20% from last year, though 24% higher than two years ago.
These trends reflect a cooling off since the peak speculative boom, but the long-term surge in participation remains stark.
Sebi's six-year analysis (from FY20 through FY25) reveals a persistent pattern: the vast majority of retail traders are consistently losing money in equity derivatives trading.
This has prompted the regulator to maintain close surveillance of market behaviour and flag potential systemic risks.
'Trends in turnover of index options will continue to be observed from the perspective of ensuring investor protection and market stability,' Sebi said in its statement.
To that end, new measures introduced on May 29, 2025, include stricter disclosure norms, enhanced risk indicators for derivatives products, and steps to minimise spurious ban periods in single-stock derivatives trading.
Sebi has repeatedly highlighted that without improved risk awareness, India's growing retail investor base could face significant harm. Monday's report reinforces that concern, adding hard numbers to the regulator's longstanding warnings.
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