Mumbai: The Securities and Exchange Board of India (Sebi) is considering whether margin requirements for longer-dated derivative contracts can be reduced, as the market regulator looks to encourage greater participation in segments such as stock futures, stock options and longer-tenor contracts.
Sebi is “prepared to look into” issues around margins for longer-dated derivatives, chairman Tuhin Kanta Pandey said on the sidelines of the SBI Banking and Economics Conclave on Thursday, adding that more needs to be done to develop such products.
Amid retail activity worries
The comments come against the backdrop of concerns about the concentration of retail activity in index options. Sebi has previously taken several measures aimed at curbing excessive retail participation in equity derivatives, after finding that a large majority of individual traders were losing money.
“We have many other derivatives where we need to do much more, for example, longer-term derivatives, the futures and also the stock futures and the stock options of their longer-dated versions,” Pandey said.
India’s derivatives market has become heavily tilted towards options, particularly index options. The regulator’s latest study, released in August, showed that 87.7% of individual traders incurred losses in equity derivatives in FY26, although the proportion was lower than the 90.9% recorded in FY25.
Aggregate losses among individual traders also declined to ₹91,686 crore in FY26 from ₹1.12 trillion a year earlier. However, the average loss per trader increased 2% to ₹1.17 lakh.
The number of individual traders participating in equity derivatives fell 18% to 8.77 million in FY26, marking the first decline since FY16.
Participating traders
Sebi’s study also highlighted the growing number of traders who participate exclusively in derivatives, without any cash-market turnover.
In FY26, about 1.86 million traders had no cash-market turnover and participated only in derivatives. The number of such traders has risen from fewer than 100,000 before the covid-19 pandemic to more than 1.8 million in fiscal 2026.
The regulator said the objective now was to develop the derivatives market in a way that encourages more balanced participation rather than introducing measures that could unnecessarily disrupt trading.
“The market is quite tilted in favour of particularly options trading and that too around the index options,” Pandey said.
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