New Delhi,sep 23
Approximately 93 per cent, or over 9 out of 10 individual traders in the equity futures and options (F&O) segment, continue to incur significant losses, a new study by the Securities and Exchange Board of India (SEBI) has revealed.Despite consecutive years of losses, more than 75 per cent of loss-making traders continued trading in F&O.The aggregate losses of individual traders exceeded Rs 1.8 lakh crore over the three-year period between 2021-22 and 2023-24, according to the study.F&O, which stands for Futures and Options, refers to financial derivatives that allow traders to speculate on asset price movements without owning the asset itself. The underlying asset can range from stocks, bonds, commodities, and currencies to indices, exchange rates, or even interest rates.India’s financial market regulator SEBI has expressed concern over speculative activities in the derivatives segment, which go against the original purpose of these asset categories.The latest study follows a report published by SEBI in January 2023, which found that 89 per cent, or slightly less than 9 out of 10 individual equity F&O traders, lost money in 2021-22.With increased participation of individual investors in equity and equity derivatives markets, the current study aimed to analyse the profit and loss patterns of individual F&O traders over three years and across all investor categories during the single year of 2023-24.On average, individual F&O investors incurred losses of approximately Rs 2 lakh (inclusive of transaction costs) over the three-year period.The top 3.5 per cent of loss-makers, roughly 4 lakh traders, faced an average loss of Rs 28 lakh per person over the same period, inclusive of transaction costs, according to SEBI.The study found that only 1 per cent of individual traders managed to earn profits exceeding Rs 1 lakh, after adjusting for transaction costs.In contrast to individual traders, proprietary traders and Foreign Portfolio Investors (FPIs) recorded gross trading profits of Rs 33,000 crore and Rs 28,000 crore, respectively, in 2023-24 (before accounting for transaction costs).Against this, individuals and other entities incurred losses exceeding Rs 61,000 crore in FY24.
