MANU/SPRL/0002/2023

Ministry : Securities and Exchange Board of India

Department/Board : Press Release

Press Release No. : 02/2023

Date : 25.01.2023

SEBI underlines the need for analysis and disclosure of risks of trading in F&O

Under the supervision of a working group, SEBI has conducted a study analysing the trends in both participation and in profits and losses of individual traders in the equity F&O segment. The working group had representation from academia, clearing corporations, brokers, and market experts.

To compare results in a contextual manner before and after the pandemic, the study covers the periods of FY 2018-19 and FY 2021-22. The study is based on a sample of all individual clients of all the top-10 stock brokers, accounting for 67% of the overall individual client turnover in the equity F&O segment during FY 2021-22.

Some of the major findings of the study are as under:

• There has been a significant increase of over 500% in the number of individual traders in the equity F&O segment in FY 2021-22, as compared to FY 2018-19.

• 98% of individual traders in the equity F&O segment traded in options during FY 2021-22.

• 9 out of 10 individual traders in the equity F&O segment incurred net losses during both the years FY 2018-19 and FY 2021-22.

• On average, loss makers registered net trading loss close to ` 50,000 in FY 2021-22. The average absolute net loss of a loss maker was over 15 times the net profit made by a profit maker.*

• Over and above the net trading losses incurred, loss makers expended an additional 28%* of net trading losses as transaction costs.