F&O frenzy beyond metros: Smaller towns dabbled in trading more than mutual funds, shows Sebi survey

Sebi data revealed that 72.2% of the total F&O traders belonged to the B30 cities, whereas this pool accounted for 61.7% of the mutual funds investors.

The futures and options frenzy has reached far beyond the major metros and larger urban centres, as a new Sebi survey has shown that nearly three quarters of all the F&O trades in FY24 came from B30 cities, or cities beyond the top 30.

Sebi data revealed that 72.2% of the total F&O traders belonged to the B30 cities, whereas this pool accounted for 61.7% of the mutual funds investors.

Read More: SEBI study finds 93% of individual F&O traders made losses between FY22-24

A closer look at the distribution of F&O traders shows that Assam has emerged as the state that has seen the most growth in two years, followed by UP and Bihar.

F&O Traders - States That Saw Most Growth

Within Tier I cities, derivative traders had higher contribution to turnover but lower contribution to losses. Whereas, beyond the top three-tiered cities, contributed lower to turnover but had higher contribution to losses.

In FY24, the survey revealed that F&O traders from B30 cities contributed 51.3% to total turnover in Individual category, but representing 68.1% total losses of the category. This fact underscores that investors from B30 towns are more active in the F&O segment than in mutual funds, as compared to investors from T30 cities.

The data shows that the ratio of F&O traders to mutual fund investors is significantly higher in B30 cities compared to T30 cities. In FY24, for every 100 mutual fund investors in B30 cities, there were 28.6 F&O traders, while in T30 cities, the ratio was lower at 17.8 F&O traders per 100 mutual fund investors. This indicates a stronger presence of F&O trading in smaller towns and cities compared to larger urban centres.

Another insight was that the top four states with highest average per person loss was all from South India, namely, Telangana (Rs 1.97 lakh per person loss), followed by Andhra Pradesh (Rs 1.45 lakh per person), Tamil Nadu (Rs 1.37 lakh per person) and Karnataka (Rs 1.35 lakh per person).