Over a year after India's market regulator stepped in to instill discipline, the allure of high-risk futures and options (F&O) trading remains potent for retail investors. In a surprising turn, newcomers have propelled equity options volumes in the December quarter past the levels seen before the Securities and Exchange Board of India (Sebi) implemented stricter curbs in October 2024.
Defying the Odds: Volumes Surge Post-Regulation
Data from HDFC Securities reveals a significant rebound. The average daily premium turnover (ADTV) for index and stock options on both the National Stock Exchange (NSE) and BSE soared by 23% to ₹75,739 crore in the third quarter of FY26 (Q3FY26), as of 15 December. This marks the fastest growth in seven quarters, climbing from ₹61,446 crore in the previous quarter (Q2FY26).
Remarkably, this current turnover even surpasses the ₹73,857 crore recorded in Q2FY25, the period just before Sebi announced its stringent measures. The regulator had acted after discovering that nine out of ten individual traders lost money in index options, with cumulative losses hitting a staggering ₹2.88 trillion between FY22 and FY25.
The Retail Phenomenon: Steady Inflow Amidst Churn
While the overall number of unique participants declined initially after the rules—which included tripling contract sizes and limiting weekly options—were enforced, participation has been recovering. NSE data shows the investor count in equity options rose to 3.29 million in October 2025, up from 3.27 million in September and 3.11 million in August.
This is a rebound from a low of 2.97 million in March 2025, after the norms took effect. The NSE continues to dominate with a 74.1% share of the equity options market as of October-end, while BSE has steadily captured the remaining quarter.
Industry experts attribute the rising turnover to a constant stream of new, often younger, investors entering the markets. "Many of them start by exploring multiple products, including derivatives, as part of their learning curve," explained Dinesh Thakkar of Angel One. He noted that over time, many shift towards equities and mutual funds for long-term wealth building.
Who Really Drives the Market? The Big vs. Small Player Divide
A deeper look at the data reveals a stark contrast in market influence. According to NSE figures for October, investors trading with up to ₹10 lakh each contributed a mere 1.95% to the gross premium turnover. In stark contrast, those trading over ₹10 crore each accounted for a dominant 69% of the total ₹11.8 trillion turnover.
Within this large-ticket segment, proprietary traders were the key players, responsible for 72.3% of the turnover. Retail investors contributed only 12.1%, and foreign investors 9.9%. However, in the below ₹10 lakh bucket, individuals overwhelmingly dominated, accounting for 99.8% of the premium turnover.
"The rise in premium turnover is reflective of an expanding and stronger market post the Sebi regulatory strictures," said Amit Chandra of HDFC Securities. He added that retail contribution to overall options volumes remains relatively small, with proprietary brokers taking the big bets on indices.
Sebi's Evolving Strategy and Market Discipline
Sebi's intervention has been phased and evolving. After the initial October 2024 measures, the regulator introduced further reforms between July and December 2025. These included imposing a net limit of ₹1,500 crore per client and a new gross daily limit of ₹10,000 crore to be monitored by exchanges, aiming to curb outsized intraday positions that heighten systemic risk.
Analysts believe these steps have strengthened market foundations. "These measures add to market discipline and reduce systemic risk, but there is always a fresh group of new investors waiting to fill the gap left by the loss-makers," observed Rajesh Palviya of Axis Securities. He also pointed out that the outperformance of large-cap indices like the Nifty, which rose 3.2% in Q3FY26, has increased interest in benchmark index options compared to mid- and small-cap indices.
As the market evolves, Sebi continues to monitor the impact of its measures on volumes and investor losses, walking a tightrope between fostering a vibrant market and protecting retail participants from significant financial harm.
