SEBI's F&O rules, 18 months on: what the data actually shows
On 1 October 2024, India's market regulator rolled out six measures to curb retail speculation in equity derivatives. Eighteen months and several phased rollouts later, the data is in. It is messier than the headlines suggest.
Published 26 May 2026 · Updated 26 May 2026 · By Epicenter Exchange
India runs the world's largest equity derivatives market by contract volume. According to the Futures Industry Association's 2024 annual survey, the National Stock Exchange (NSE) cleared more options contracts in 2023 than any other exchange on earth — more than CBOE, more than B3, more than every US exchange combined.[1] Most of that volume came from retail traders trading weekly index options on NIFTY and BANKNIFTY, on lots that cost less than ₹5,000 in upfront premium.
SEBI, the Securities and Exchange Board of India, looked at this and — backed by two of its own studies — decided the explosion was not creating wealth. It was destroying it.
Why SEBI acted: two studies most retail traders never read
In January 2023, SEBI's research division published a study titled "Analysis of Profit and Loss of Individual Traders dealing in equity Futures and Options (F&O) Segment." The study tracked 45.24 lakh (4.52 million) unique individual traders across the top 10 brokers, covering FY22.
The findings, in SEBI's own words:[2]
- 89% of individual traders in the equity F&O segment incurred net losses.
- Average loss per loss-making trader: ₹1.1 lakh in a single year.
- The top 1% of profitable traders accounted for nearly all the profits.
- The 11% who made money paid roughly 28% of their profit as transaction costs.
The numbers did not improve. In September 2024, SEBI published an updated study covering FY22 through FY24 — a full three years.[3] What it showed:
Aggregate net loss by individual traders in equity F&O over FY22–FY24: roughly ₹1.81 lakh crore (about US$22 billion).
Share of individual traders who lost money across the three-year window: roughly 93%.
Number of unique loss-making traders rose from ⁈5.9 million (FY22) to ⁈9.1 million (FY24).
To put ₹1.81 lakh crore in scale: that is more than India's entire annual budget for the Ministry of Health and Family Welfare, four times over. Transferred, year after year, from millions of small traders to a small set of professional counterparties, exchanges, brokers, and the taxman.
The six measures, in plain English
SEBI's circular dated 1 October 2024 introduced six structural changes to index derivatives, phased in between November 2024 and April 2025.[4] Here is each one, what it does, and who it hits.
Minimum contract value raised to ₹15–20 lakh. Earlier the minimum notional was ₹5–10 lakh. Lot sizes for NIFTY, BANKNIFTY, FINNIFTY, etc. went up correspondingly. This raises the premium outlay per lot and pushes the smallest accounts out of weekly options.
Only one weekly expiry per exchange. NSE and BSE each have to pick a single weekly index for weekly expiry; everything else moves to monthly. Earlier, six weekly-expiry products existed across the two exchanges, almost one per day of the week.
Upfront collection of option premium from buyers. Brokers can no longer extend intraday leverage on long option positions. The full premium has to be paid before the trade.
Removal of calendar-spread margin benefit on expiry day. Traders previously netted off near-expiry vs far-expiry positions and put up smaller margin. From expiry day onwards, both legs are margined separately.
Intraday monitoring of position limits. The exchange now checks if a member has breached the position limit during the day, not only at end of day. Algorithmic / HFT firms feel this one the most.
Increase in tail-risk coverage on expiry day. An additional 2% extreme-loss margin is added on the day a contract expires — the day where the gamma exposure is highest.
What 18 months of data shows
The first wave (measures #1, #2, #3) took effect in November 2024. Items #4–#6 followed through February–April 2025.
Three signals stand out from publicly available exchange data and SEBI/RBI commentary.
1. Volumes fell, but did not collapse
NSE's monthly market statistics show index options premium turnover — the actual rupees traded — fell roughly 30–40% in the first quarter after November 2024 relative to the immediately preceding quarter.[5] By Q1 FY26 (Apr–Jun 2025), volume had stabilised at a lower, but still very high, level. India remains the world's largest derivatives market by contract count.
What changed more than total volume was its composition: weekly expiry concentration dropped, and the share of monthly expiry rose. The pure "lottery ticket" trade — buy a far-OTM weekly call for ₹300 hoping for a moonshot — became more expensive in lot terms and is now spread across fewer expiries.
2. The percentage of losers stayed roughly the same
The Reserve Bank of India's June 2025 Financial Stability Report reproduced updated SEBI numbers showing that the share of loss-making individual F&O traders had moved only modestly — still in the high 80s to low 90s percent range — even with smaller, mechanically more cautious activity.[6]
Translation: making lot sizes bigger and weekly options scarcer reduced gross losses in absolute rupee terms, but it did not change the underlying outcome distribution. Most individuals still lose; the few who win still win the bulk.
3. The composition of losers shifted
One nuance from the September 2024 SEBI study, repeated in later commentary: traders aged under 30 are over-represented in the losers, and their average loss per head is rising faster than older cohorts. The new rules raise the cost of entry but do not address the behavioural reasons — over-confidence, dopamine, social-media trading content — that draw young traders in.[3]
What the rules did not change
Three things worth being honest about:
Costs are still real. Even a successful trader pays STT, exchange fees, GST, SEBI turnover fee, brokerage, and stamp duty on every leg. SEBI's 2023 study estimated total transaction costs around 28% of gross profits for the winners. The 2024 measures did not reduce that.
Edge is rare and asymmetric. The structural fact is that derivative markets are zero-sum (before costs) and negative-sum (after costs). Professional counterparties — market makers, prop desks, foreign portfolio investors — are not retiring because lot sizes went up.
Crypto did not get this scrutiny. Indian crypto traders sit under the 30% flat tax + 1% TDS regime introduced in 2022, but with no equivalent of these structural measures. Whether that changes in coming budgets is anyone's guess.
What it means for an individual trader
None of the below is advice. It is the arithmetic.
- If you trade index options for entertainment, the new rules make each "ticket" more expensive. The number of tickets you can afford in a year has roughly halved at the same notional risk budget.
- If you trade as a real strategy — with backtests, position sizing, edge — the rules barely affect you. They affect the volume around you, not the math of your strategy. You can verify this in our in-browser backtester.
- If you have never sized a position with reference to your total net worth, do that exercise before the next trade. SEBI's data shows the modal outcome for an unsized individual F&O trader is a multi-lakh annual loss.
The point of writing about this on a site called Epicenter Exchange is not to discourage trading. It is to make the actual probability distribution visible, before you sit at the table.
Sources
- Futures Industry Association, Global Futures and Options Volume 2023. Available at fia.org/resources. NSE has been the largest exchange by contract volume globally since 2020.
- Securities and Exchange Board of India, Analysis of Profit and Loss of Individual Traders dealing in equity Futures and Options (F&O) Segment, 25 January 2023. Available at sebi.gov.in.
- Securities and Exchange Board of India, Updated study on Profit and Loss of Individual Traders in equity F&O Segment, FY22–FY24, September 2024. Available on the SEBI website under Reports & Statistics → Research.
- SEBI, Master Circular on Measures to Strengthen the Index Derivatives Framework, dated 1 October 2024. Available at sebi.gov.in/legal/circulars.
- National Stock Exchange, Monthly Market Pulse and Historical Reports on index derivatives. Available at nseindia.com.
- Reserve Bank of India, Financial Stability Report, June 2025. Available at rbi.org.in.
All figures cross-checked against SEBI's own publications. Where rounded, original source values are preserved in the linked documents. Nothing in this article is investment advice. Past data does not predict future outcomes.