Indian traders have been hit by "the system", and not by the market itself, said technical analyst Vishal Mehta, as he pointed towards a series of decisions that had an adverse effect on derivatives trade.
"India once dominated global derivatives trading. In Q1 2024, NSE alone accounted for 84% of all equity options traded globally. Monthly F&O turnover had hit a staggering Rs 8,740 lakh crore. We weren't just a market. We were the market," said Mehta, who is co-chair of India chapter of CMT Association, the world's biggest body of technical analysts.
Further, he broke down how particular decisions by the regulator have dragged down the derivatives market. In October 2024, he points out, the SEBI wiped out of several weekly expiry contracts, leading to a sharp fall in monthly options contracts from 397 million to 68 million.
Additionally, monthly premium turnovers toppled to Rs 15,100 crore from Rs 25,000 crore.
Also, doubling of lot sizes in February 2025, locked out small traders, he said. The contracts saw a substantial rise from an earlier Rs 5 to 10 lakh to Rs 15 to 20 lakh.
SEBI's Jane Street's crackdown in July 2025 led to an immediate crash of 36% in Indian options premium turnover, he said. Also, new demat account openings also declined, with the number standing at 21.8 million in 2025, down from 36.1 million in 2024, Mehta added.
In December, the market regulator had also tightened the open interest caps or position limits to a net of Rs 1,500 crore per client.
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The CMT Association co-chair took a deep dive into the adverse impact of the new STT hikes of introduced by the Centre. The STT rates were increased from 0.0125% to 0.05% for futures trading and from 0.0625% to 0.15% for Options trading.
"A Rs 20L futures trade now costs Rs 1,000 in STT vs Rs 400 earlier. 20 trades/month = Rs 12,000 extra. Every month. Win or lose. Because STT doesn't care about your P&L. It charges on turnover," Mehta highlighted, adding that the justification that 91% of retail F&O traders lost money in FY25 fell short to be the rationale for the decision.
According to Mehta, instead of looking for a better solution, such as investor education and stronger risk frameworks, the government just made it more expensive to trade in the F&O market. "A trader already losing money now pays more to lose it," he remarked.
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