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SEBI says retail derivatives traders lost $21.7 bn in three years

VCCircle

VCCircle · 10m ago

SEBI says retail derivatives traders lost $21.7 bn in three years

Indian retail derivatives traders have incurred net losses of 1.81 trillion rupees ($21.7 billion) over a three-year period ending in March 2024, according to a study by the Securities and Exchange Board of India (SEBI). The study found that only 7.2% of retail traders were able to generate profits in the futures and options trading segment. These findings highlight the challenges faced by retail investors in the Indian derivatives market.

Related News

Intraday stock traders jump 300% in four years, 70% make losses: SEBI

VCCircle

VCCircle · 1y ago

Intraday stock traders jump 300% in four years, 70% make losses: SEBI

According to a study by the Securities and Exchange Board of India (SEBI), the number of intraday traders in India's equity cash market has increased by 300% between fiscal years 2019 and 2023. However, 70% of these traders were making losses. The study also revealed that traders younger than 30 accounted for three-fourths of the lossmakers. Furthermore, the study found that 80% of traders executing over 500 trades in a year incurred losses. In response to the risks associated with speculative trading, the Indian government has raised taxes on gains from equity investments and derivatives.

Equity option traders hunt for new playgrounds as tighter SEBI rules loom

VCCircle

VCCircle · 9m ago

Equity option traders hunt for new playgrounds as tighter SEBI rules loom

Millions of Indian retail traders are searching for new ways to make profits ahead of stricter regulations on equity derivatives trading. The Securities and Exchange Board of India (SEBI) has warned of risks and reduced the number of contracts offered by exchanges. As a result, traders are considering alternatives such as commodity derivatives, foreign exchange, intraday equity bets, and holding options contracts for longer periods. However, the transition may not be smooth, as there are concerns that other markets lack the liquidity and depth provided by equity options.

SEBI proposes measures to curb derivatives trading

VCCircle

VCCircle · 1y ago

SEBI proposes measures to curb derivatives trading

India's market regulator, the Securities and Exchange Board of India (SEBI), has proposed several measures to curb speculative trading in index derivatives. These measures include limiting multiple option contract expiries and increasing the size of options contracts. The SEBI also plans to set a minimum value for derivative contracts and introduce weekly options contracts on a single benchmark index. These changes aim to address the risks associated with speculative trading, particularly by retail investors. The proposed measures may impact retail volumes on options and have implications for high-frequency traders and exchanges.

'Gambling instinct' boosting retail derivatives trading: Economic Survey

VCCircle

VCCircle · 1y ago

'Gambling instinct' boosting retail derivatives trading: Economic Survey

The Indian retail market has seen a surge in derivatives trading, which may be attributed to a "gambling instinct" among investors, according to the Economic Survey by India's finance ministry. The report warns that a significant correction in the stock market could drive away young investors. While derivatives trading offers the potential for large gains, the report cautions that globally, derivatives traders tend to lose money. The surge in retail participation in derivatives trading has raised concerns about potential losses in the event of a market correction. The report also highlights the need for caution in the rising market capitalisation of Indian companies.

'Regulatory risk...the biggest risk': Nithin Kamath on RBI's currency derivative

Livemint

Livemint · 1y ago

'Regulatory risk...the biggest risk': Nithin Kamath on RBI's currency derivative

The Reserve Bank of India's new restrictions on unhedged currency derivatives is expected to lead to the downfall of currency derivative trading for retail traders. Nithin Kamath, the co-founder of Zerodha, stated that regulatory risk is the biggest threat faced by stock brokers. As per the RBI circular from 5 January, traders must showcase contracted or potential currency exposure to participate in currency derivatives on stock exchanges. Traders with an exposure above $100 million need to appoint a custodian participant or an authorized dealer, while those with smaller exposure require a declaration stating they are trading currencies to hedge contracted exposure.

Death of currency derivative trading by retail traders: Kamath on RBI order

Inshorts · 1y ago

Death of currency derivative trading by retail traders: Kamath on RBI order

Zerodha CEO Nithin Kamath has commented on RBI's directive requiring traders to have exposure to the underlying currency to trade in currency derivatives on the stock exchange. "This means the death of currency derivative trading on stock exchanges by retail traders," Kamath said. "Regulatory risk is by far the biggest risk for stock brokers," he added.

SEBI’s new rules could impact 60% of F&O trades, says Zerodha's Nithin Kamath

YourStory

YourStory · 10m ago

SEBI’s new rules could impact 60% of F&O trades, says Zerodha's Nithin Kamath

- SEBI's new rules limiting weekly expiries in the derivatives market could impact about 60% of overall F&O trades. - The restriction on weekly contracts might lead to a potential 30% reduction in Zerodha's order volume. - Zerodha co-founder Nithin Kamath believes the impact will become clearer by November 20 when the rules come into effect, and the company might reconsider its pricing structures accordingly. - The changes also include doubling contract sizes and increasing margin requirements, which could deter retail traders with smaller capital. - SEBI's intention behind the changes is to reduce systemic risks and speculative trading in derivatives but can also affect accessibility and participation for retail investors. - Discount brokers like Groww and Zerodha have been posting rising revenues and profits, with Zerodha reaching $1 billion in revenue in FY24 and Groww's net operating income more than doubling.

BT MindRush: Sebi chief highlights retail investor F&O losses, calls for reforms

Business Today

Business Today · 4m ago

BT MindRush: Sebi chief highlights retail investor F&O losses, calls for reforms

At Business Today MindRush 2025, SEBI chief highlighted that 90% of retail investors incur losses in F&O trading, often due to overconfidence. The derivatives market favors institutional players, prompting calls for reforms to address disparities and inform investors. SEBI has introduced measures like Aadhaar-based KYC and DigiLocker integration for investor protection. Concerns about misleading trading volume metrics were also raised, and SEBI has issued a discussion paper to solicit feedback.

UK to end ban on retail investors buying crypto exchange-traded notes

Economic Times

Economic Times · 2m ago

UK to end ban on retail investors buying crypto exchange-traded notes

Britain's Financial Conduct Authority plans to lift a ban on retail investors buying crypto exchange-traded notes (ETNs), reversing its earlier stance due to perceived risks. The move aims to bolster growth and competitiveness in the UK's digital assets industry. Previously, only professional traders were permitted access to ETNs. The initiative is part of a broader regulatory shift to include cryptocurrencies, aligning more with the US approach, while maintaining a ban on retail trading of crypto derivatives.

Sebi seeks brokers’ input on deepening markets after Jane Street crackdown

Livemint

Livemint · 19d ago

Sebi seeks brokers’ input on deepening markets after Jane Street crackdown

Sebi is seeking input from brokers on deepening market liquidity and promoting retail-friendly products following a critical order on Jane Street. Discussions included index futures, stock lending mechanisms, and addressing tax issues to encourage futures over options due to cost advantages. The regulator aims to prevent short-term trading frenzies that harm retail investors' judgments, focusing on making index futures more liquid, while maintaining openness to derivatives trading.

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