F&O Trading: Retail Activity In Futures And Options Slows Down As Sebi’s Measures Take Effect

Retail investors have reduced their activity in the equity derivatives market after the Securities and Exchange Board of India (Sebi) began tightening rules to discouraging excessive speculation. In a research paper released on July 7, 2025, the regulator said the turnover of individual investors in equity derivatives (or futures and options, F&O), measured in premium terms, declined by 11 per cent year-on-year (YoY) during the six-month period from December 2024 to May 2025. The number of unique individual investors trading in the equity derivative segment also came down by 20 per cent YoY.

According to the research paper, overall index options turnover shrunk 9 per cent in premium terms, and a sharp 29 per cent in notional terms over the same period. However, compared to two years ago, index options volume is up by 14 per cent in premium terms and 42 per cent in notional terms.

“India continues to see relatively very high level of trading in equity derivatives, compared to other markets, particularly in index options,” Sebi noted.

Retail Traders Drawn More To Index Options

The study found that retail traders were increasingly drawn to index options. Sebi noted that in FY20, just Rs 5 out of every Rs 100 traded by individuals in equity derivatives went into index options. By FY25, this rose to Rs 41.

Over this five-year period, individual investor turnover in equity derivatives grew at a compound annual growth rate (CAGR) of 19 per cent. The fastest growth was seen in index options, where the average daily traded value by individuals rose at a CAGR of 82 per cent, followed by 48 per cent growth in stock options.

In the over all equity derivatives segment, the average daily premium traded in index options rose at a CAGR of 72 per cent, and 54 per cent for single stock options. In notional terms, index options turnover grew 101 per cent, and stock options grew 61 per cent over the same period.

Unique Retail Trader Count Shrinks

Sebi’s study also found that the number of unique individual traders in the equity derivative segment across BSE (formerly Bombay Stock Exchange) and National Stock Exchange (NSE) also came down by 20 per cent YoY.

Between December 2024 to May 2025, the count of traders with total turnover less than Rs 10,000 reduced 30 per cent to 10,36,412, from 14,82,603 in the year-ago period. Those with turnover between Rs 10,000 and Rs 1 lakh declined by 22 per cent to 12,47,137 from 16,01,235 in the same period last year.

“It  is  seen  that  traders  with  total  turnover  less  than Rs 1  lakh  witnessed  high degrowth  compared  to  previous  year,” Sebi said.

Similarly, the count of traders with turnover between Rs 1 lakh and Rs 10 lakh fell by 24 per cent to 16,61,303, compared to 21,71,763 a year ago. Traders in the Rs 1 crore to Rs 10 crore turnover bracket saw the smallest decline, with their numbers falling by just 4 per cent to 2,22,202 from 2,49,799.

Quarterly data showed, the number of unique individual traders fell from 61.4 lakh in Q1 FY25 to 42.7 lakh in Q4 FY25. This is the period when Sebi started implementing stricter F&O rules.

91% Individual F&O Traders Incurred Losses in FY25

According to the study, 91 per cent of individual traders in the equity derivatives segment incurred net losses in FY25, a trend similar to the previous year. However, total losses widened by 41 per cent to Rs 1.05 lakh crore in FY25, up from Rs 74,812 crore in FY24.

The average loss per trader increased 27 per cent YoY to Rs 1,10,069 lakh in FY25, up from Rs 86,728 in FY24.