By Nesil Staney
Index options turnover was down 9% year on year in premium terms and 29% in notional terms during the period between December 2024 and May 2025, said a Sebi study on Monday.
This study checked trading activity of all investors and individual investors separately across both the stock exchanges.
The report came days after the regulator’s record impound on US algo trader Jane Street for manipulations in index options, which brokers and traders said is less than a sixth of actual ill-gotten profits.
Compared with two years ago, the index options volume was up by 14% in premium terms and 42% in notional terms while the turnover of individuals in premium terms in equity derivatives segment (EDS) was down 11% year on year and up 36% over the same period two years ago, the study said. The number of unique individual investors trading in EDS was down 20% compared to the previous year and up 24% from two years ago.
India accounts for high level of trading in EDS, compared to other markets, particularly in index options, the study found, for a six-year period from FY20 to FY25. This includes an analysis of profit and loss of individual traders. At aggregate level, nearly 91% of individual traders incurred net loss in EDS in FY25, as in FY24. Such trends in turnover of index options will be observed from the perspective of ensuring investor protection and market stability, said Sebi.
Sandip Raichuria, CEO of broking and distribution at Prabhudas Lilladher, said it is high time for Sebi to set an entry barrier for retail traders in EDS. Two other brokerage heads expressed similar views.
To ensure the rapid growth in EDS matches with commensurate risk metrics, Sebi introduced some measures. These, the study said, include better monitoring and disclosure of risks in derivatives, reducing instances of spurious ban periods for derivatives on single stocks and a better oversight on concentration or manipulation risk in index options.