The Securities and Exchange Board of India announced a comprehensive overhaul of futures and options trading rules effective from July 2026, aimed at reducing retail investor losses in the derivatives segment. The new norms mandate a minimum net worth of Rs 5 lakh for F&O trading and require new traders to complete a mandatory certification course before gaining market access.
SEBI data shows that over 89% of individual F&O traders incurred losses in FY25, with average losses exceeding Rs 1.1 lakh per person. The new framework also increases the lot size for index options, effectively raising the minimum capital required to trade and reducing the accessibility for small retail participants who lack adequate risk management skills.
Brokerages have expressed mixed reactions, with discount brokers concerned about volumes while traditional full-service brokers see an opportunity to offer advisory services. SEBI Chairman Tuhin Kanta Pandey said the measures are designed to protect retail investors without stifling market growth. Industry experts expect F&O volumes to fall 15-20% initially before stabilising.
