Active brokerage accounts turn passive on tighter F&O rules by Sebi, market volatility in 2025

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The domestic stock broking industry is seeing a sharp contraction in active accounts, which have fallen by nearly 40 lakh since January, as markets turned volatile amid Trump’s tariffs and the regulator tightened norms in the derivatives segment.

Year-till-date data from National Stock Exchange (NSE) showed that as of August, active clients dropped to 4.62 crore, down from 5.02 crore at the start of the year, a net erosion of 39.69 lakh accounts.

This decline has been driven primarily by a slump in futures and options activity following the tightening of rules in the derivatives segment by Sebi, the capital market regulator. Higher margin requirements, curbs on weekly expiries, steeper capital thresholds and heavier taxation have collectively dampened retail participation in derivatives, according to several market participants.

Analysts also noted a growing tilt towards managed investment avenues such as mutual funds, portfolio management services and alternative investment funds.

Market participants believe that the discount broking firms - heavily dependent on equities and derivatives - are ceding ground to full-service players and fintechs offering a wider bouquet of products, ranging from bonds and global equities to structured products and wealth solutions.

The sharper reporting requirements too have accentuated the fall in active accounts in the F&O segment. Sebi now defines an ‘active’ client as one executing at least a single trade in 12 months, and with dormant accounts being weeded out, the drop in the number of active investors is likely more pronounced now.

Brokerages have felt the pressure unevenly, with Groww posting the steepest decline - shedding 10.86 lakh clients - between January and August, while Zerodha and Angel One have clocked a drop of 8.57 lakh and 7.09 lakh active accounts, respectively. Upstox has reported a fall of 5.1 lakh, while Mirae Assets, Sharekhan, and 5paisa have seen their base shrink by 1.77 lakh, 1.14 lakh, and 1.05 lakh, respectively. Kotak Securities lost 80,259 clients, Motilal Oswal 64,316, and both Alice Blue and Axis Securities around 41,500 each, between January and August.

On the other hand, a handful of players have managed to buck the trend, with HDFC Securities emerging as the biggest gainer, adding 1.21 lakh clients during this period. SBICap Securities and Dhan (Moneylicious Securities) followed with additions of 71,759 and 54,612, respectively. Other notable gainers included Paytm Money, ICICI Securities, Choice Equity, Tradesmart Fintech, Univest Stock Broking, Moneywise Finvest, and Bajaj Financial.

So far in 2025, the benchmark Sensex and Nifty indices have risen 5 percent each, while the broader markets - BSE Midcap and Smallcap indices - have lost 1.2 percent and 3.5 percent, respectively.