Today, Kotak shared a graph on his official X handle to drive home the point.
The comment follows the recent report by Securities and Exchange Board of India (Sebi) study that said that nearly 91% of individual traders incurred net loss in the equity derivatives segment (EDS) in FY25 at the aggregate level, similar to the trends observed in FY24. The net losses of individual traders widened by 41% to Rs 1.05 lakh crore in FY25 from Rs 74,812 crore in FY24.Read More: 91% of individual F&O traders lost money in FY25 despite Sebi curbs: Study
Kotak’s tweet is also in light of the recent Sebi order on Jane Street, barring the sophisticated high-frequency trading (HFT) from trading in the Indian stock markets. While the order is interim and on grounds of alleged manipulation in the derivatives segment, the billionaire businessman had expressed that the action signified three aspects viz. money muscle, low liquidity in single stock versus derivatives and business model linked more to volume and less to fundamentals.
“Recent stock market actions signify 3 aspects: money power, low liquidity in single stocks vs.index derivatives, exchange, broker business models linked to volume, less to fundamentals. Primary role of market is to promote capital formation, fair price discovery,” Kotak had tweeted on July 5.
Read More: Explained: What is Jane Street and how it made Rs 36,500 crore profit by gaming Dalal Street
Sebi study
While individual traders incurred losses despite its actions on F&O segment to control speculative trading, the measures ensured that the number of unique individual investors trading in EDS was down by 20% compared to previous year and up by 24% from 2 years ago. Turnover of individuals in premium terms in EDS also came down by 11% YoY and up by 36% over a similar period two years ago.
Moreover, the index options turnover came down by 9% , year-on-year in premium terms and 29% in notional terms compared to 2 years ago. Though the index options volume was up by 14% in premium terms and 42% in notional terms.
Sebi via its October 1, 2024 circular had introduced measures to strengthen the equity index derivatives framework. Among the measures introduced by Sebi were limiting the weekly expiry to just one benchmark per exchange. The market watchdog also introduced an additional margin of 2% of the contract size on all short option contracts to curtail speculative trading.
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