88% retail investors lost money in F&O trading in FY26: Sebi
In FY26, an alarming trend emerged in India's equity derivatives market, with nearly 90% of traders facing financial losses. Retail participation saw an unexpected decline of 18%, marking a significant shift not seen in a decade. Regulatory changes pushed numerous new traders out, leading to a notable concentration in short-dated options, where the highest risks burdened younger investors with…
A recent study by India's Securities and Exchange Board (SEBI) reveals that 88% of retail investors who engaged in equity derivatives trading in fiscal year 2026 (FY26) ended up losing money. The total net losses amounted to an astounding ₹91,685 crore. This marks the first decline in retail participation in the market in a decade, with individual trader numbers falling 18% to 88 lakh from 1 crore the previous year.
The downturn was largely driven by a series of regulatory measures introduced by SEBI aimed at curbing excessive speculation in short-dated index options. These measures included restricting weekly expiries to one index per exchange, raising minimum contract sizes, tightening margin requirements, and mandating upfront premiums. The government also increased the securities transaction tax on equity derivatives.
Trading remained highly concentrated in contracts nearing their expiration dates, with 59% of index options turnover occurring in contracts expiring on the same day, around 75% within one day and 97% within one week of expiry. The study also found that many of the traders who lost money had limited exposure to traditional equities and relatively small portfolios.
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