Significant Deficits in Trading Profits: Approximately 91% of traders suffered losses in equity derivatives during the financial year 25.
The Securities and Exchange Board of India (SEBI) has been closely monitoring trends in the turnover of index options in the Equity Derivatives Segment (EDS) to ensure investor protection and market stability. According to SEBI's analysis from December 2024 to May 2025, the EDS has shown a few key trends.
Firstly, almost 91% of individual investors (retail traders) incurred losses in futures and options (F&O) trading during FY25. This challenging environment for retail participants in the derivatives market is a continuation of a trend noted in FY2024.
Secondly, there has been a decline in index options turnover in the EDS. In premium terms, the turnover decreased by 9% compared to the same period last year, while in notional terms, it fell by 29%. However, it's worth noting that compared to two years ago, index options volume is up by 14% (in premium terms) and 42% (in notional terms).
The number of unique individual investors trading in the EDS has decreased compared to the previous year but has increased from two years ago. Despite the decrease in the number of traders, the trading activity in the EDS, particularly in index options, remains relatively high in India compared to other markets.
SEBI has introduced measures to improve risk monitoring in the derivatives market. These include better monitoring and disclosure of risks, reducing spurious ban periods for derivatives on single stocks, and improved oversight over concentration or manipulation risk in index options. The analysis was conducted to understand the impact of these measures on trading activity in the EDS and the cash market.
As the analysis covers only the period from December 2024 to May 2025, more detailed monthly trends during this period can be found in SEBI's official reports or financial news sources. For a comparison, the trading activity of individual investors in the EDS was also analysed for the same period two years ago.
In FY 2025, the turnover of individuals in premium terms in the EDS is down by 11% year-on-year but up by 36% over the similar period two years ago. This suggests that while the number of traders has decreased, those who continue to trade are showing increased activity.
In conclusion, while the EDS in India continues to see high trading activity, particularly in index options, the environment remains challenging for retail traders. SEBI's measures aim to address these issues and promote a more stable and secure derivatives market for all investors.
Investors in the business sector looking for opportunities in financing and investing may find it Interesting to note that the turnover of index options in India's Equity Derivatives Segment (EDS) has shown a decline, with a 9% decrease in premium terms and a 29% decrease in notional terms from the same period last year. Despite this, the trading activity in the EDS, particularly in index options, remains relatively high compared to other markets in India.
