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The Securities and Exchange Board of India's (Sebi’s) measures to cool the retail frenzy in options trading appear to have begun yielding results, with small-trader participation declining almost 20% in FY26 from the previous year.
Equity options, which comprise index and stock options, are the most widely traded derivative products within the futures and options (F&O) segment. The fall in participation is thus a clear outcome of Sebi’s measures, experts said.
According to NSE data, the number of investors trading less than ₹10,000 each on the National Stock Exchange (NSE) fell by two-fifths to 450,000 in FY26, from 780,000 in FY25, according to data from the stock exchange. The number of investors trading ₹10,000 to ₹1 lakh fell 25%, while those trading ₹1 lakh to 10 lakh dropped 13% .
Together, these declines drove the total count down by 780,000 or 19% year-on-year to 3.37 million in FY26. Meanwhile, the aggregate count of investors trading ₹10 lakh to upwards of ₹10 crore remained steady at 950,000.
Interestingly, although the aggregate count of investors trading up to ₹10 lakh accounted for nearly 72% of all equity option traders on the NSE inFY26, they contributed a mere 2.1% ( ₹24,944 crore) to the total turnover of ₹11.87 trillion, according to data from the exchange.
"It's clear from the data that Sebi’s objective of tempering options frenzy among small investors is making an impact, given the decline in their participation numbers," said Amit Chandra , senior vice president (research) at HDFC Securities. "The bulk of the turnover comes from high-networth and foreign participants who use machine trading strategies," he added.
This is evidenced by the data, which shows that traders with a turnover exceeding ₹10 crore each accounting for 70% of the total premium turnover. The remaining share is divided among groups trading between ₹10 lakh- ₹1 crore and ₹1 crore– ₹10 crore each.
"This trend of decline in small investor count on F&O could continue with Sebi imposing higher margins to trade and brokers not allowed to fund client margins, reducing the leverage," said Rajesh Palviya , senior VP (research) at Axis Securities.
While the BSE doesn't provide such granular data, analysts said NSE could be used as a proxy for the segment, given its 74.7% market share in premium turnover of equity options at the end of March 2026. Premium turnover refers to the actual traded value of a contract as opposed to the notional value, which is the contract's total value.
Alarmed by the ₹1.8 trillion net loss suffered by individual derivative traders between FY22 and FY24, Sebi introduced several phased measures in the second half of FY25 to curb excessive speculation. These reforms included restricting each exchange to just one weekly index option, tripling contract sizes, and increasing margin requirements on expiry days.
Ram Sahgal is a deputy editor at Mint. He has over 20 years of experience in journalism, with previous roles at The Intelligent Investor, Bombay Times, The Economic Times, and The New Indian Express. Between his media roles, he briefly worked at a commodities exchange before returning to his true passion, business journalism. Ram graduated in liberal arts from St Xavier’s College, Mumbai, where he studied films, which explains his move to Bombay Times, where he covered the film industry during the rise of Sunny Deol and Sanjay Dutt. He took a leap of faith to transfer to The Economic Times, and thanks to his restless mind, later moved to cover the commodities beat. Over the past three years, Ram has been tracking the stock markets at Mint. His focus areas include writing about market infrastructure institutions, brokerages, derivatives, and related regulations. His hobbies include spotting trains and understanding the locomotives that power them. In his free time, he takes his octogenarian mother out for drives and goes to the cinema with her on weekends. If he has a dream, it is to write a screenplay for a movie. For now, he enjoys viewing market data on NSE and BSE, observing the shifting mood of Mr Market, and conversing with market experts.