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India retail F&O market shrinks as new traders fall and exits rise
Active individual equity derivatives traders fell about 18% to around 8.8 million in FY26, while new entrants dropped 39% year-on-year to 2.08 million.
India’s retail equity derivatives boom has posted its first annual decline, with fewer people entering the market and more traders leaving, according to Securities and Exchange Board of India data cited by LiveMint Markets.
Active individual traders fell about 18% year-on-year to around 8.8 million in fiscal year 2026, down from over 10 million in FY25. The report also showed notional turnover growth slowing sharply after earlier rapid expansion, rising 4.2% in FY26 after a 20.4% gain in FY25.
LiveMint Markets linked the slowdown to risk-management changes phased in by Sebi between November 2024 and April 2025. Those measures included limiting weekly derivative contracts to one index per exchange, raising minimum contract sizes, and adding Extreme Loss Margin requirements on short option positions on expiry days.
Another cited factor was a higher Securities Transaction Tax on equity derivatives, effective 1 October 2024. The decline was concentrated in options, where most individual traders participate, and new trader entries peaked at 4.31 million in FY24 before falling to 3.43 million in FY25 and 2.08 million in FY26, while traders leaving rose from 420,000 in FY22 to 4.57 million in FY26.