Sebi Study: Derivatives Profit Gap Widens in FY26
By Market Desk
Sebi’s FY26 study reveals a stark profit disparity in derivatives trading: institutions and prop traders profited heavily, while retail traders faced significant losses.
A recent study by the Securities and Exchange Board of India (Sebi) for the fiscal year 2026 has revealed a significant disparity in the derivatives market. It highlighted that large institutions and proprietary traders recorded substantial profits, while individual retail traders faced considerable losses.
Institutional Dominance in Derivatives
Proprietary traders led the profit charts in India’s derivatives segment, accumulating significant gross trading gains during FY26. Other institutional participants also reported positive returns, showcasing a concentrated profit distribution.
- Proprietary traders: Approximately Rs 44,000 crore in gross trading profit.
- Foreign funds: Rs 14,000 crore.
- Corporates: Rs 8,000 crore.
- Mutual funds: Rs 3,000 crore.
- Partnership firms/LLPs: Rs 3,000 crore.
Algorithmic Trading Fuels Institutional Gains
The Sebi study specifically noted that a vast majority of the profits for foreign funds and proprietary traders were generated through advanced trading strategies. This reliance on automated systems underscores a key operational difference in the market.
- 99% of profits for foreign funds and proprietary traders were achieved via algorithmic trading entities.
Retail Traders Face Substantial Losses
In stark contrast to institutional performance, individual retail traders experienced significant financial setbacks within the same derivatives segment. Their aggregate gross trading loss reached a substantial figure.
- Individual retail traders: Around Rs 72,000 crore in gross trading loss.
- Aggregate net losses for individuals: Rs 91,685 crore in FY26.
- This marks a reduction from Rs 1.12 lakh crore in FY25.
- Almost 88% of individual traders continued to experience losses.
Moderation in Retail Derivatives Participation
The report also indicated a shift in retail engagement with the Futures & Options (F&O) segment, showing a notable decrease in active traders and new market entrants. This moderation suggests a changing landscape for individual investors.
- Active individual traders decreased by approximately 20%.
- From 98.1 lakh in FY25 to 78.6 lakh in FY26.
- New entrants declined by about 40%.
The Sebi study paints a clear picture of the derivatives market, where institutional and proprietary players, leveraging algorithmic trading, consistently outperform individual retail investors who largely incur losses. The continued high percentage of losing retail traders, despite a moderation in overall participation, highlights persistent challenges for this segment.