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Business Standard

NSE plays down 'world's largest' tag as Brazil's B3 claims top spot

The National Stock Exchange (NSE) has lost its status as the world's largest derivatives exchange by number of contracts to Brazil's B3 for the first seven months of 2025, CEO Ashishkumar Chauhan said during the exchange's quarterly earnings call on Wednesday. Chauhan attributed B3's ascent to its even smaller contract sizes compared to those on the NSE, noting that contract size plays a pivotal role in driving trading volumes. In July, NSE averaged approximately 112.7 million contracts traded per day. The exchange was seen downplaying the "world's largest derivatives exchange" tag amid rising concerns around mounting losses of individual investors and outsized gains made by global trading firms in the domestic market. 'India remains one of the largest derivatives markets globally in terms of contracts traded, reflecting the vibrancy and accessibility of our market,' Chauhan said. 'The average contract size in India is relatively small. The higher volume is largely driven by the smaller contract size of Indian options. In value terms, NSE's options premium turnover is less than one-fifth of US options turnover for stocks." To address concerns over speculative activity, the Securities and Exchange Board of India (Sebi) recently raised the minimum contract size for index F&O contracts to Rs 15 lakh, resulting in larger lot sizes. Additional regulatory measures—such as eliminating calendar spread benefits on expiry days and limiting weekly expiries—have also been introduced, with five out of six reforms implemented so far. These interventions follow data showing that over 90 per cent of retail traders incur losses in F&O trading. The impact has been visible with derivatives trading volumes declining close to 30 per cent from their peak. Also, there has said to be some moderation in high-frequency trading, with some traders adopting a wait-and-watch approach amid regulatory probes, such as the investigation involving Jane Street. ALSO READ: NSE management also advocated for clearer investor eligibility and product suitability criteria to help protect retail participants from excessive losses, alongside reinforced investor education efforts. 'By introducing investor eligibility and suitability norms can help ring-fence retail investors' losses while investor education is enhanced,' an NSE official noted. Concerns over global trade uncertainties and tariffs are contributing to a cautious market sentiment, the management observed. The exchange announced its intent to launch VIX futures, expanding further into volatility-linked products. 'One feedback that has come for us to consider launching Vix Futures, something that we may consider at a suitable point in time," said Sriram Krishnan, Chief Business Development Officer while highlighting NSE's plan for more contracts in the commodity and power derivatives space. Earlier this month, NSE launched electricity futures in the power derivatives segment. Plans were also discussed for expanding colocation rack infrastructure. NSE reported a consolidated net profit of Rs 2,924 crore in Q1 FY26, up 14 per cent from Rs 2,567 crore a year earlier. However, revenue from operations declined to Rs 4,032 crore from Rs 4,510 crore in the same period last exchange confirmed that its two settlement applications relating to colocation and dark fibre are still under consideration by Sebi.