SEBI Studies Show 87.7% of Individual Equity Derivatives Traders Lost Money in FY26 as Participation Fell
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The Securities and Exchange Board of India released two new studies on 20 August 2026 examining the trading behaviour and profitability of individual traders in the equity derivatives segment during FY2025-26. The findings show that regulatory tightening and changing market conditions were accompanied by a sizeable decline in individual participation, but the overwhelming majority of individual traders still lost money.
What SEBI released
SEBI issued Press Release No. 50/2026 and separately published two research studies: one on the trading behaviour of individual traders in equity derivatives and another on their profitability during FY25-FY26. Together, the studies provide an updated view of how retail activity changed after a period of intense growth in futures and options trading.
According to the findings reported from the SEBI studies, individual participation in equity derivatives fell materially in FY26. The number of active individual traders was about 20% lower than in FY25, while a large number of traders who had participated in the previous year did not return.
Losses remained widespread despite lower participation
The most striking profitability finding is that 87.7% of individual traders incurred losses in FY26. Aggregate net losses of individual traders were about ₹91,685 crore, compared with roughly ₹1.12 lakh crore in FY25. The decline in aggregate losses is notable, but the proportion of loss-making traders remained extremely high.
SEBI's data also indicate that individual traders incurred substantial transaction costs. These costs matter because brokerage, exchange charges, taxes and other trading expenses can materially worsen realised outcomes for high-frequency participants even before the economic result of individual trades is considered.
Trader exits accelerated
The studies also point to a sharp increase in exits from the equity derivatives segment. Around 4.6 million traders who had participated in FY25 did not return in FY26. That was significantly higher than the number of exits seen in the preceding period. The shift suggests that the composition of the individual trader base is changing, not merely the volume of contracts traded.
For finance and risk professionals, this is important because headline turnover can obscure changes in the number and type of participants. A market can continue to post very large derivatives volumes even while a substantial part of the retail participant base is shrinking or cycling out.
Institutional and algorithmic participants showed a different outcome
The profitability pattern was sharply different for larger professional participants. Proprietary traders and foreign portfolio investors recorded substantial gross trading profits in FY26, and SEBI's study findings indicate that algorithmic trading entities accounted for the overwhelming majority of those profits. This gap between individual and sophisticated institutional outcomes remains a central investor-protection concern.
Trading activity also remained heavily concentrated around derivative-expiry dates. Reported study findings show that a large share of index-options turnover occurred on the expiry day itself or within one day of expiry. That concentration is relevant to market-risk monitoring because short-duration, expiry-focused trading can amplify speculative behaviour and intraday volatility.
Why the findings matter for CAs and finance professionals
The studies are not only relevant to active traders. Chartered accountants, CFO teams, wealth advisers, internal auditors and finance professionals may encounter derivatives exposures in treasury activity, personal investment reporting, risk disclosures and client advisory contexts. The latest SEBI data reinforce the need to distinguish hedging activity from speculative short-term trading and to assess costs, leverage and realised outcomes rather than relying on gross turnover or isolated winning trades.
For entities with governance responsibilities over treasury or proprietary trading, the findings are also a reminder that derivatives policies should clearly define authorised instruments, position limits, hedge documentation, escalation thresholds and periodic performance review.
Regulatory context
SEBI has introduced multiple measures in recent periods aimed at moderating excessive speculation in equity derivatives, including changes affecting contract sizes, index-expiry structures and collection of option premiums. The FY26 studies give the market an early evidence base for assessing how participation and profitability are evolving alongside those measures.
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Key takeaway
SEBI's 20 August 2026 studies show a market in transition: fewer individuals participated in equity derivatives in FY26 and aggregate losses declined, but 87.7% of individual traders still lost money. For investors and finance professionals, the central message is that lower participation has not eliminated the structural profitability challenge faced by individual derivatives traders.
