Retail traders made a combined net loss of ₹1.81 lakh crore in futures and options trading in the three years to March 2024 and only 7.2% of individual traders made a profit during this period, a study done by markets regulator Securities and Exchange Board of India (Sebi) showed.

The number of retail traders has almost doubled in two years from about 5.1 million in FY22 to about 9.6 million in FY24. Although they contributed about 30% in total turnover in FY24, they are a clear majority in number terms, as 99.8% of traders in the derivatives segment are individuals, Sebi said.

The regulator has flagged concerns over the chaotic trading in index options and is likely to tighten rules for derivatives trading soon. It has proposed several changes including increasing the minimum contract size in index derivatives, a reduction in weekly index product offerings and making options trading costlier among other things to curb the heightened risky speculation among retail investors.

During FY22 to FY24, there were a total of 1.13 crore unique Individual traders, who traded in futures and options at least once during these three years.

Among individual traders, 91.1% incurred about ₹75,000 crore in net losses in the derivatives segment in FY 24, Sebi said.

While individuals made losses in futures and options, foreign portfolio investors and proprietary traders earned profits.The proprietary traders earned about ₹33,000 crore of gross profits in the derivatives segment in FY24, followed by foreign portfolio investors who earned about ₹28,000 crore in gross profits.The majority of profits for foreign portfolio investors and proprietary traders were made by algo entities. 97% of profits of foreign portfolio investors and 96% of profits of proprietary traders came from algo entities in FY24, the regulator said.

The proportion of young traders below 30 years of age trading in futures and options has increased significantly from 31% in FY23 to 43% in FY24 and most of these individual trades belonged to low-income groups earning less than ₹5 lakh annually, the regulator said.

It also said, almost half of all the futures and options traders in FY24 were new traders, those who traded for the first time in three years.

More than 50% of all the futures and options traders, who traded in FY24, were from the top four states namely Maharashtra, Gujarat, Uttar Pradesh and Rajasthan.

For every 100 mutual fund investors, there were 28.6 futures and options traders from beyond the top 30 cities, Sebi said.