Summary of this article
Equity futures turnover fell 21.40 per cent in three months to June
Equity options premium turnover declined 30.80 per cent over the same period
Higher STT and easing volatility likely weighed on derivatives trading activity
India's derivatives market may finally be showing signs of cooling after a series of regulatory changes over the past year. Fresh data released by the Securities and Exchange Board of India (Sebi) suggests that trading activity in the futures and options (F&O) segment eased in June, with turnover falling across equity, currency and interest rate derivatives.
According to Sebi's July 2026 Monthly Bulletin, the average daily turnover (ADT) in equity futures stood at Rs 1.45 lakh crore in June, down 8.20 per cent from the previous month. Trading in equity options also slowed, with premium ADT declining 9.40 per cent month-on-month (m-o-m) to Rs 87,808 crore. The slowdown looks bigger if March is taken as the reference point. Equity futures turnover was lower by 21.40 per cent, while options premium turnover dropped 30.80 per cent over the three-month period.
Sebi said the slowdown was likely due to the revision in Securities Transaction Tax (STT), along with easing market volatility. India VIX, often called the market's fear gauge, cooled from around 22 in March to about 14.5 in June.
The slowdown comes a few months after the government again raised the STT on derivatives. Effective April 1, 2026, the STT on the sale of futures was increased by 150 per cent, from 0.02 per cent to 0.05 per cent of the traded value. The STT on the sale of options was raised by 50 per cent, from 0.1 per cent to 0.15 per cent of the option premium. The STT on exercised options was also increased by 20 per cent, from 0.125 per cent to 0.15 per cent of the intrinsic value. The higher levy was announced in the Union Budget 2026 as part of the government's effort to curb excessive speculative trading and raise additional revenue.
The June data also reinforces a trend Sebi had flagged earlier. In its post-reform assessment released in July 2025, the regulator said the October 2024 measures had led to a decline in index options turnover as well as the number of unique individual traders participating in the segment. At the same time, Sebi noted that India's index options market continued to remain among the most active globally.
The slowdown was not limited to equity derivatives. Sebi's data showed trading activity weakening across other derivative segments as well. Currency derivatives turnover declined 16 per cent m-o-m to Rs 1.10 lakh crore in June, while interest rate futures turnover slumped 43.3 per cent to Rs 2,497 crore after scaling a five-year high in May. Commodity derivatives turnover also came down, slipping 1.7 per cent during the month.
Sebi's tighter stance on derivatives has largely been driven by the losses suffered by retail traders. The regulator's recent study on the equity F&O segment found that around 91 per cent of individual traders incurred net losses during FY25. The findings broadly mirror Sebi's earlier studies, which showed that 93 per cent of individual traders lost money between FY22 and FY24, while 89 per cent ended FY22 with losses.
Over the past year, Sebi has introduced several measures to reduce speculative activity in the derivatives market. Besides the higher STT, the regulator restricted exchanges to one weekly expiry benchmark index each, increased the minimum contract size for index derivatives, removed certain calendar spread benefits on expiry day, made upfront collection of option premiums mandatory and tightened position limits and risk management norms.
