Higher digitisation and easy access to trading platforms have led to a surge in futures and options volumes trading by retail investors in the first six months of FY24, nearly overtaking that of FY23.The total number of contracts traded on the NSE’s derivatives segment is 41.42 billion with a turnover of Rs 35,999 trillion recorded till October 6. This compares to 41.77 billion in FY23 with a turnover of Rs 38,223 trillion.
Meanwhile, the total index volumes traded on the NSE stood at 40.71 billion till October 6, compared to 40.54 billion in FY23.
“The biggest enablers of F&O volumes is the proliferation of online brokers like Zerodha, Groww and Upstox,” an independent market expert said. The weekly options trading by the exchanges has also contributed to the growth in F&O volumes, he said.
Diwan believes the high level of interest and awareness generated on social media are driving volumes.
The chatter on social media also tends to convey an impression that options trading is an effective way to create wealth very quickly, added Diwan. In addition, the relatively-low capital requirement to start trading has also lured more and more retail investors, he added.
While some believe this trend will continue, tighter regulations from Securities and Exchange Board of India may temper volumes.
Tighter regulations and risk measures from Sebi in term of margins and cash margins could lead to a slowdown in F&O volumes though that may be temporary, experts said. Despite the tighter rules, they believe many more may trade in the derivatives segment. Starting October 1, Sebi has mandated that traders need to maintain a 50% cash margin, failing which they would be penalised.
The total number of active retail investors has been increasing on a monthly basis since April, according to NSE data. The total number of retail investors in August stood at 10.7 million, the highest in the last 18 months. Of this, retail investors in the equity derivatives segment stood at a record high of about 4 million in August.