4.4 Lakh F&O Traders Made Profits In FY26, But Transaction Costs Pushed Them Into Losses

Brokerage fees, exchange charges and statutory levies erased the gains of nearly 4,40,000 individual derivatives traders who would otherwise have closed FY26 in profit, a Securities and Exchange Board of India (Sebi) study has found. The finding comes even as the overall cost of trading stayed almost flat despite a fall in market volumes, pushing up what each trader effectively paid to participate.

The report, "Profitability of Individual Traders in the Equity Derivatives Segment (FY25–FY26)," from Sebi's Department of Economic and Policy Analysis, puts total transaction costs borne by individual traders in FY26 at about Rs 24,859 crore, barely up from Rs 24,827 crore in FY25. Premium turnover in the segment fell close to 5 per cent over the same period, meaning trading became costlier per rupee wagered, not cheaper.

On a gross basis, before transaction costs, 82.1 per cent of the 7.86 million individual traders in Sebi’s FY26 sample, or about 6.45 million traders, made losses. After accounting for brokerage, exchange charges, Securities Transaction tax (STT), Goods and Services Tax (GST), stamp duty and Sebi fees, the share of net loss-makers rose to 87.7 per cent, or about 6.89 million traders. That means roughly 4,40,000 traders who were profitable before costs ended the year with a net loss after transaction costs.

FY25 saw a similar, slightly larger swing, with 5,30,000 gross profit-makers turning into net loss-makers once costs were applied.

The average cost per trader rose from Rs 26,027 in FY25 to Rs 31,628 in FY26, a jump of 21.5 per cent, even as the trader base shrank by roughly a fifth. The number of active individual traders fell by about 20 per cent, from 9.81 million to 7.86 million. Fewer people stayed in the market, and those who did paid noticeably more per head.

The burden also falls unevenly between winners and losers. Transaction costs consumed 35 per cent of gross losses among those who lost money in FY26, against 21 per cent of gross profits among those who made money, a gap that has held through the study period and shows that costs cut deeper into a losing trade than a winning one.

Brokerage remains the largest single component of the bill, at 44.3 per cent in FY26, though its share has been shrinking steadily from 52.3 per cent in FY22. Taking up the slack is STT, whose share has more than doubled, from 13 per cent to 26.7 per cent, after the government raised the tax on futures and options from October 1, 2024. STT collected from individual traders jumped 35 per cent in FY26 alone, to Rs 6,645 crore from Rs 4,920 crore in FY25, and is up more than five times since FY22, when it stood at Rs 1,291 crore. Exchange fees made up 15.8 per cent of the FY26 bill, GST 11 per cent, and stamp duty and Sebi fees under 1 per cent each. Statutory levies together now account for close to 40 per cent of an individual trader's cost of trading, against roughly a quarter five years ago.

Across FY22 to FY26, individual traders paid nearly Rs 1 lakh crore in cumulative transaction costs. Brokerage accounted for almost half of this, while STT made up about a fifth. Sebi said its estimates are based on a sample covering around 80 per cent of turnover and roughly 90 per cent of individual traders. It added that the actual market-wide cost could be about 1.25 times higher.

This cost burden came on top of sizeable trading losses. Aggregate net losses of individual F&O traders fell 18 per cent to Rs 91,685 crore in FY26 from a revised Rs 1.12 lakh crore in FY25. However, the average loss per trader increased to around Rs 1.17 lakh from Rs 1.14 lakh, as many smaller and less active traders exited the market.

Options trading, where the overwhelming majority of retail money sits, accounted for around 92 per cent of aggregate individual losses in FY26. Traders below 30 accounted for 43 per cent of the trader base, while those earning less than Rs 5 lakh a year accounted for 53 per cent of total losses despite contributing 43 per cent of turnover.

Sebi’s study says its measures introduced in November 2024, including limiting weekly expiries, increasing contract sizes and tightening expiry-day margins, came alongside a sharp fall in retail participation, especially in index options. However, Sebi clarified that the timing shows an association and does not prove that the measures directly caused the decline.