The study from the document titled “Analysis of Profits & Losses in the Equity Derivatives Segment (FY22-FY24)” provides a detailed investigation into the performance of traders in India’s F&O (Futures and Options) segment over three fiscal years. Here’s a comprehensive overview, broken down into key sections, and statistical insights presented in a tabular format for clarity:
Key Findings
-
High Proportion of Loss-Makers Among Individuals:
- FY24: 91.1% of individual traders (approximately 73 lakh) faced losses, with an average net loss of ₹1.20 lakh per person.
- Over the period from FY22 to FY24, 1.13 crore individual traders incurred cumulative losses amounting to ₹1.81 lakh crore. Specifically, FY24 saw individual traders losing ₹75k crore.
- Only 7.2% of individual traders made profits, with just 1% earning more than ₹1 lakh after accounting for transaction costs.
-
Profit-Makers (FPIs and Proprietary Traders):
- Proprietary traders earned ₹33,000 crore in gross profits in FY24.
- FPIs (Foreign Portfolio Investors) garnered ₹28,000 crore in gross profits.
- Majority of these profits came from algorithmic trading. About 97% of FPIs’ profits and 96% of proprietary traders’ profits were generated by Algo entities.
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Transaction Costs:
- Individual traders incurred more than ₹50,000 crore in transaction costs between FY22 and FY24.
- Of this, more than half (₹25,000 crore) was in the form of brokerage, followed by ₹13,800 crore in Government taxes (STT, GST, and stamp duty), and ₹10,200 crore in exchange fees.
- On average, individual traders spent ₹26,000 per person in transaction costs in FY24, with 71% of these costs being attributed to brokerage and exchange fees.
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Demographic Insights:
- The proportion of young traders (under 30 years) rose significantly from 31% in FY23 to 43% in FY24. However, 93% of these young traders incurred losses.
- Female participation in F&O trading decreased from 14.9% in FY22 to 13.7% in FY24. However, fewer female traders incurred losses compared to male traders.
- A large portion of traders, about 76%, reported annual incomes below ₹5 lakh, with 93% of these traders incurring losses.
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Geographic Distribution:
- B30 cities (beyond the top 30 cities) accounted for 72.2% of F&O traders in FY24, with a significant contribution to the total turnover and losses.
- The states with the largest number of F&O traders were Maharashtra, Gujarat, Uttar Pradesh, and Rajasthan.
- The highest average per-person losses were recorded in southern states like Telangana (₹1.97 lakh), Andhra Pradesh (₹1.45 lakh), Tamil Nadu (₹1.37 lakh), and Karnataka (₹1.35 lakh).
Statistical Summary (Tabular Format)
| Category | FY24 Key Data |
|---|---|
| Total Individual Traders | 95.7 lakh |
| Percentage of Loss-Makers | 91.1% |
| Average Net Loss per Person | ₹1.20 lakh |
| Total Losses by Individuals (FY22-FY24) | ₹1.81 lakh crore |
| Profitable Traders (FY22-FY24) | 7.2% |
| Transaction Costs | ₹50,000 crore (₹26,000 per person in FY24) |
| Top States by F&O Traders | Maharashtra, Gujarat, UP, Rajasthan |
| Top States by Average Loss | Telangana, Andhra Pradesh, Tamil Nadu, Karnataka |
Breakdown of Loss-Makers by Trading Category (FY24)
| Category | Percentage of Loss-Makers | Average Loss (₹) |
|---|---|---|
| Futures | 60% | ₹60,000 |
| Options | 91.5% | ₹91,000 |
Geographic Insights (FY24)
| State | Number of Traders (in lakh) | Average Loss (₹) |
|---|---|---|
| Maharashtra | 18.8 | ₹74,000 |
| Gujarat | 10.1 | ₹88,000 |
| UP | 9.3 | ₹83,000 |
| Rajasthan | 5.4 | ₹76,000 |
Distribution of Traders Based on Turnover Size (FY22-FY24)
| Turnover Category | % of Traders | % of Total Losses | % Loss-Makers |
|---|---|---|---|
| Small Traders (<₹1 lakh) | 30% | 1% | 91.5% |
| Mid-Size Traders (₹1 lakh - ₹1 crore) | 53% | 18.4% | 93.8% |
| High-Value Traders (>₹1 crore) | 17% | 81% | 95% |
Conclusion
The findings of this study highlight the overwhelming proportion of loss-making individual traders in India’s F&O segment, particularly younger traders and those from lower income brackets. The majority of profits are concentrated among a small number of proprietary and FPI traders, especially those utilizing algorithmic trading strategies. Transaction costs also represent a significant burden on individual traders. As a result, there’s a strong case for improving trader education and risk management practices, especially given the rapid growth in F&O participation from B30 cities.
For detailed information, read the full story here: SEBI | Study - Analysis of Profits & Losses in the Equity Derivatives Segment (FY22-FY24)
