SEBI may consider linking options leverage to cash positions via a formula: CNBC-TV18

Nearly 91% of individual traders incurred losses in the equity derivatives segment in fiscal year 2025, according to a study released by markets regulator Sebi on Monday.

Moreover, a similar trend was observed in FY2024.

The study indicated that the net losses of individual traders widened by 41% to Rs 1,05,603 crore in FY25 from Rs 74,812 crore in FY24.

Alongside this, the number of unique individual investors trading in the futures and options segment declined by 20% compared to the previous year, though it was up by 24% from two years ago.

Sebi conducted this analysis to evaluate trading activity in the Equity Derivatives Segment (EDS), especially after introducing measures on October 1, 2024, to strengthen the equity index derivatives framework. The analysis covered all investors and focused on individual traders from December 2024 to May 2025.

"Analysis of profit and loss of individual traders in EDS suggests that at the aggregate level, nearly 91% of individual traders incurred net loss in EDS in FY 2025 (a similar trend was observed in FY 2024)," the study noted.

During this period, index options turnover saw a year-on-year decline of 9% in premium terms and 29% in notional terms. However, when compared to two years ago, index options volume increased by 14% in premium terms and 42% in notional terms.

The study further found that the turnover of individuals in premium terms in EDS decreased by 11% year-on-year, but rose by 36% over a similar period two years ago.

Despite these fluctuations, India continues to witness relatively high levels of trading in the EDS, particularly in index options.

"Trends in turnover of index options will continue to be observed from the perspective of ensuring investor protection and market stability," Sebi said.

In order to ensure that the rapid growth in the derivatives market matches with commensurate risk monitoring metrics, Sebi on May 29, 2025, introduced a set of measures aimed at enhancing risk monitoring and disclosure in the derivatives market.

These measures also aimed to reduce instances of spurious ban periods for derivatives on single stocks and ensure better oversight to prevent concentration or manipulation risks in index options.