Individual traders incurred net losses of ₹105,603 crore in the futures and options (F&O) segment during financial year (FY)24-25, Parliament was informed on Monday, underlining the scale of retail losses in India’s fast-growing derivatives market even as regulators step up enforcement against market manipulation.
Replying to an unstarred question in the Lok Sabha, Pankaj Chaudhary, minister of state for finance, says a report by the Securities and Exchange Board of India (SEBI) showed that losses by individual traders continued to mount in the derivatives segment, with nearly 90% of participants ending the year in the red. The disclosure comes amid growing concerns over excessive speculation by retail investors in high-risk products such as index options.
Rao Rajendra Singh, a member of Parliament (MP) has asked about the losses suffered by individual traders in F&O segment during FY24-25 and whether the government proposes to strengthen regulatory safeguards to protect retail investors from such speculative and high-risk trading activities.
The government also informed the lower house that SEBI has initiated enforcement action against four entities for their alleged involvement in price and volume manipulation in the equity and equity derivatives segments. The suspected violations relate to the period between 1 January 2023 and 31 March 2025, during which abnormal trading activity was detected, particularly in segments linked to index options.
The Union ministry of finance (MoF) says these manipulative practices are under regulatory scrutiny as part of SEBI’s broader surveillance efforts to maintain market integrity and curb artificial volatility. While details of the entities and the exact nature of the enforcement action were not disclosed, the government confirmed that the cases involved suspected market abuse affecting both cash and derivatives markets.
The disclosure of large retail losses and the enforcement action come against the backdrop of a sharp rise in participation by individual investors in the F&O segment, driven by easy access through trading apps and aggressive marketing. SEBI’s findings have repeatedly shown that a vast majority of retail traders fail to generate profits in derivatives trading, prompting regulatory intervention.
To address these risks, the government states that SEBI has implemented a series of measures since October 2024 to strengthen safeguards in the F&O segment. These include curbs on weekly index derivatives, higher risk coverage on options expiry days, increased contract sizes, tighter position limits and upfront collection of option premiums. Additional steps taken in May 2025 focused on streamlining expiry days across exchanges and improving risk monitoring.
SEBI has also mandated prominent risk disclosures on trading platforms, requiring brokers to inform users at login that nine out of ten individual traders incurred losses in the F&O segment. Alongside regulatory action, the government highlighted ongoing investor education initiatives, with over 35,700 awareness programmes conducted across 724 districts in FY25 to caution investors about speculative trading and market manipulation.
MoF also reiterated that enforcement against manipulative entities and tighter regulation of derivatives trading are aimed at protecting retail investors while preserving market stability, even as participation in complex financial products continues to expand.
A detailed study released by SEBI in July 2025 revealed that A staggering 91% of individual traders in India’s equity derivatives market lost money during FY24–25.
According to the "Comparative Study of Growth in Equity Derivatives Segment vis-à-vis Cash Market After Recent Measures", net losses of individual traders surged 41% year-on-year (y-o-y) to ₹1,05,603 crore in FY24-25 from ₹74,812 crore in FY23-24, even as participation rose and market volumes remained high. The study analysed trading data of nearly 9.6mn (million) individual investors, accounting for the bulk of participants in the equity derivatives segment (EDS), especially in index options.
This marks the second consecutive year in which SEBI observed a similar pattern, with around nine out of 10 individual traders ending up in the red. The average per-person loss in FY24-25 was ₹1.1 lakh.
Between December 2024 and May 2025, index options turnover declined by 9% in premium terms and 29% in notional terms compared to the previous year. However, when compared to two years ago, turnover was still up 14% and 42%, respectively.
Similarly, the turnover by individual traders in premium terms dropped 11% y-o-y but remained 36% higher than two years earlier. The number of unique individual traders also fell by 20% compared to the previous year, although it was up 24% from FY22–23 levels.
SEBI highlighted that India continues to rank among the highest globally in terms of equity derivatives activity—particularly in index options—with the number of traded contracts in Indian exchanges more than four times that of the next closest market.
Over the six-year period from FY19-20 to FY24-25, trading activity in index options surged dramatically. The average daily premium traded in index options rose from ₹4,359 crore in FY19-20 to ₹64,881 crore in FY24-25—an eye-popping compound annual growth rate (CAGR) of 72%. In notional terms, the average daily turnover of index options soared over 33 times, from ₹12.6 lakh crore to over ₹418 lakh crore.
