Over 93% retail traders lost money in F&O in three years, says Sebi

As per the recent analysis by the Securities and Exchange Board of India also known as (SEBI), retail traders have faced significant losses in equity derivatives trading. Approximately 93% of these traders incurred an average loss of Rs. 2 lakh per trader over the last three financial years. The report also noted a rise in loss-making individual investors in futures and options (F&O), increasing to 91.1% in FY24, up from 89% in FY22.

A critical concern pointed out by the report is that despite consecutive years of losses, more than three-fourths of the loss-making traders continue their F&O activity. According to data on the exchanges, the average daily turnover surged to record high at Rs. 540 trillion in September compared to nearly Rs. 360 trillion a year ago. While 99.8% of F&O traders are individual investors, they contributed only 30 per cent of the total turnover in FY24. The number of retail traders has almost doubled in the last two years from 5.1 million in FY22 to 9.6 million in FY24.

The report also noted that the growing participation of individual traders in the F&O segment has sparked a debate on product suitability and the need for safety measures and safeguards for retail investors. In FY24, around 7.3 million individual traders incurred losses, with an average net loss of ₹1.2 lakh per person, including transaction costs.

“Most of the profits were generated by larger entities that used trading algorithms. About 97 per cent of FPI profits and 96 per cent of proprietary trader profits came from algorithmic trading,” said the Sebi report.

Certain market participants have raised concerns on overseas algo traders raking in profits from the Indian market at the cost of household savings from the retail investors. The aggregate losses of 11.3 million individual traders exceeded Rs 1.8 trillion over the three-year period between FY22 and FY24. In FY24 alone, individuals incurred about Rs 75,000 crore in net losses.