Sebi's latest proposal on F&O trading won't change options volumes, but reduce futures volumes

Zerodha CEO Nithin Kamath

Zerodha chief executive officer Nithin Kamath on July 30 said market regulator Sebi’s new proposed changes for futures and options trading will not impact the options volumes, It will rather have a negative impact on the futures volumes.

“The suggested changes, even with the STT increase, won’t really change options volumes. But on the flipside, they will reduce futures volumes,” Kamath said in a post on X.

The online trading platform’s chief said futures traders are more profitable than options traders.

“From what I’ve seen at Zerodha, futures traders have higher odds of making money than option buyers. On a gross basis, futures traders are profitable about 50 percent of the time as opposed to options traders, who are only profitable about 10 percent of the time. This is because options come with almost unlimited leverage, whereas leverage on futures is capped at 6 times (15 percent for index).

“Whether it is an STT increase in budget or contract size going up to 20 lakhs, these changes will incentivize futures traders to move to options.”

Kamath suggested that it should be harder for non-serious people to trade if the government wants to cut speculation in the market.

“If the intent is to reduce speculation, then the solution is maybe to make it harder for non-serious people to trade by having a product suitability framework.”