A recent study by the Securities and Exchange Board of India (SEBI) has revealed that over 93% of individual traders in the equity futures and options (F&O) segment incurred significant losses between FY22 and FY24. The study shows aggregate losses exceeding ₹1.8 lakh crores over the three-year period.
The analysis highlights that out of over 1 crore individual F&O traders, the average loss per trader was around ₹2 lakh, inclusive of transaction costs. Particularly affected were the top 3.5% of loss-makers, approximately 4 lakh traders, who faced an average loss of ₹28 lakh per person.
In stark contrast, proprietary traders and Foreign Portfolio Investors (FPIs) reported gross trading profits of ₹33,000 crore and ₹28,000 crore respectively in FY24. The majority of these profits, 97% for FPIs and 96% for proprietary traders, were generated through algorithmic trading.
Individual traders, on average, spent ₹26,000 per person on F&O transaction costs in FY24. Over the three-year period, they collectively spent about ₹50,000 crore on transaction costs, with brokerage fees accounting for 51% and exchange fees 20% of these costs.
The study also noted a significant increase in participation from young traders and those from Beyond Top 30 (B30) cities. The proportion of traders under 30 years rose from 31% in FY23 to 43% in FY24, while individuals from B30 cities constituted over 72% of the total F&O trader base.
Despite these losses, over 75% of individual traders with consecutive years of losses continued trading in F&O. The study indicates that more than 75% of these traders had declared an annual income of less than ₹5 lakh.
