Overview of SEBI’s Recent Findings on F&O Trading Losses
The Securities and Exchange Board of India (SEBI) has issued a striking report detailing the alarming trends in the Futures and Options (F&O) trading segment over the past three financial years, from FY 2022 to FY 2024. The report reveals that an overwhelming majority of individual traders have faced significant losses, raising serious concerns about the state of equity F&O trading in India.
Losses Among Individual Traders
According to SEBI’s analysis, approximately 93% of individual traders have incurred losses in equity F&O trading during this three-year period. Specifically, in FY 2024 alone, about 91% of individual traders out of an estimated 73 lakh participants reported losses. This statistic underscores a disheartening trend where 9 out of 10 individual traders are negatively impacted by F&O trading activities.
Financial Implications of the Losses
The combined losses reported by individual traders in the F&O segment have exceeded a staggering Rs 1.8 lakh crore during the FY 2022 to FY 2024 period. On average, each trader faced a loss of around Rs 2 lakh. Moreover, around 4 lakh traders reported even more daunting statistics, with an average loss of Rs 28 lakh each. These figures take into account various transaction costs associated with trading.
| Category | Percentage of Traders | Average Loss (in Rs) |
|---|---|---|
| Traders with Losses (overall) | 93% | 2,00,000 |
| Traders with Losses (FY 2024) | 91% | 2,00,000 |
| Traders suffering > Rs 1 lakh Profit | 1% | N/A |
| High-Impact Traders (average loss) | 4 lakh | 28,00,000 |
Yearly Breakdown of Losses
In FY 2024, traders collectively lost about Rs 75,000 crore in the F&O segment alone. This substantial figure contributes to the ongoing debates about the viability and risk associated with trading in these complex financial instruments. Furthermore, the report indicates that, on average, an individual trader in the F&O segment has incurred losses of Rs 2 lakh over the last three years.
Increasing Participation in F&O Trading
Despite these loss figures, it is noteworthy that the F&O segment has seen an explosive growth of around 300% in participant numbers over the last four years. The proportion of traders under the age of 30 has surged by 48%, reflecting a growing interest among younger generations in equity markets. In addition, retail investors engaging in intraday trading within the equity cash segment have increased by over 300% when comparing FY 2023 to FY 2019. This trend highlights a significant cultural shift towards trading among younger demographics.
The Call for Caution
In light of the troubling statistics regarding F&O trading losses, SEBI Chairperson Madhabi Puri Buch has issued a stern warning regarding the speculative nature of these trades. She emphasized that the capital market regulator feels “forced” to address this issue as it has evolved into a macroeconomic concern, affecting not just investors but also the broader economic landscape. Many households are diverting their financial savings into speculative trading, leading to significant financial shortfalls for individuals, particularly among the youth.
