Despite directives from the Securities and Exchange Board of India (Sebi), the market regulator, to limit speculation in the futures market, stock market speculation has continued to reach a new high.
The notional activity in the futures and options (F&O) market reached 476 times in October, the highest monthly average in two years, while the cash segment’s turnover decreased by 4% every month. When it last occurred, it was at 487.3 times in October of 2023. The average monthly position represents the sum of the investors’ F&O positions.
After Sebi’s updated F&O framework, which went into effect on November 20, 2024, was gradually applied until February, the notional F&O turnover decreased by about 50% between October 2024 and February 2025.
These included several actions, such as collecting the option premium up front from the buyer, eliminating the calendar spread treatment on the day of expiration, monitoring position limits within the day, contract size for index derivatives, rationalizing weekly index derivatives products, and increasing tail risk coverage on the day of options expiration.
According to Sebi’s July analysis of the effects of these policies from December 2024 to May 2025, the index options turnover decreased by 29% (in notional terms) and 9% (in premium terms) annually.
With improved monitoring and disclosure of derivatives risks, fewer instances of bogus F&O ban periods in single stocks, and improved management of the potential for concentration or manipulation risk in index options, Sebi implemented measures in May to improve risk metrics in derivatives.
According to the examination of individual traders’ profit and loss in the equity derivatives market, over 91% of individual traders experienced net losses overall in FY 2025, and a similar pattern was seen in FY 2024.
