SEBI Rules Lead to Over 50% Decline in Options Trading Volumes
Options contracts fall over 50% after regulatory measures aimed at curbing excessive retail speculation, while IPO activity keeps India among global leaders.
MUMBAI: Regulatory measures introduced by the Securities and Exchange Board of India (SEBI) in the futures and options (F&O) segment during the financial year 2025-26 resulted in a significant decline in trading volumes, as the market regulator focused on controlling excessive speculative activity among retail participants.
According to SEBI’s annual report, the number of options contracts traded on stock exchanges dropped by 51.5% during FY26, while futures contract volumes declined by nearly 18%. The fall followed a series of steps introduced by the regulator to strengthen risk management and promote more responsible participation in the derivatives market.
SEBI attributed the decline to measures such as higher contract sizes, changes in weekly expiry structures, mandatory upfront premium collection and an increase in securities transaction tax. These steps were implemented to reduce high-risk trading behaviour and improve market stability.
Despite the fall in trading volumes, the options segment recorded growth in both premium and notional value terms. In contrast, the futures segment witnessed a decline across these measures during the same period.
The report also highlighted foreign portfolio investors’ (FPIs) investment trends during FY26, showing a record net outflow of more than Rs 1.5 lakh crore from Indian markets. FPIs remained net sellers of equities worth around Rs 1.8 lakh crore, while they invested Rs 25,807 crore in the debt market.
Foreign investors purchased shares worth Rs 70,822 crore through the primary market but sold equities worth over Rs 2.5 lakh crore in the secondary market. Sector-wise, FPIs showed interest in capital goods, telecom and metals, while reducing exposure to information technology, financial services, FMCG and healthcare stocks.
SEBI’s report further noted that India recorded the highest number of initial public offerings (IPOs) globally during FY26. However, in terms of funds raised through public offerings, India ranked third worldwide, reflecting strong investor participation and continued market activity.
