Sebi’s latest study turned out to be an explosion for the retail traders, who lost more than Rs 1.06 crore of their hard-earned cash in the F&O frenzy. The report came amid the alleged market manipulation by global trading giant Jane Street, which is said to rake a profit of Rs 36,671 crore between January 2023 and March 2025 as per the market regulators.
However, the crisis is deeper within India’s fast-growing derivatives market, which is the new playground for speculators and punters, who eye overnight wealth in futures and options (F&O), without understanding the basics and take massive, unsustainable losses in F&O trading.
According to SEBI, a staggering 91 per cent of individual traders in the equity derivatives segment incurred losses in FY25. What’s worse: fewer traders lost more money compared to the previous year, signaling deeper concentration of risk. Meanwhile, firms like Jane Street reportedly minted supernatural returns as retailers felt the burns.
Nirav Chheda, AVP Derivatives & Technical Research at Nirmal Bang Securities said that apparently, retailers lost money, while on the other hand, traders like Jane Street appear to be the biggest beneficiary of this but this can not be a conclusion. Majority of the retail traders do not have plans to trade and they do not have stop losses, which leads to widening of losses, he explained.
Echoing the similar tone, Nilesh Jain, Head Derivatives and Technical research at Centrum Broking said that Jane appears to be the biggest beneficiary of what retailers have lost but this does not move away from the fact that retail traders lack proper strategy in the F&O segment and burn their hands. “F&O a ‘get rich quick’ scheme and shall be seen as a speculator’s playground,” he said.
The Jane Street angle has magnified the pain, with allegedly manipulating and reaping massive gains on options trades. While SEBI investigates further, it has frozen nearly Rs 4,844 crore in alleged illegal gains and barred Jane Street from accessing Indian markets for now. In response to the broader crisis in F&O trading, SEBI has tightened rules and introduced structural reforms.
“SEBI’s latest reforms in the derivatives segment signal a strong regulatory push to curb speculative excess and safeguard retail investors. Stricter margin norms, reduced leverage, and enhanced disclosures aim to bring greater transparency and discipline to the market,” said Sunil Kalra, Partner – Governance, Risk, Compliance and Forensic Investigation Services at Forvis Mazars (India).
Kalra believes the temporary decline in volumes is a necessary adjustment. “While the immediate dip in turnover and active traders reflects a period of adjustment, the long-term intent is clear—market stability over unchecked growth. With 91 per cent of individual traders still incurring losses, the focus must now shift to investor education and structured access. Mandatory training and risk-capped strategies could be game changers,” he added.
Even as the Jane Street’s alleged conduct is under scrutiny, many experts say the retail losses are not solely due to external factors — but rather, deeply rooted behavioral and strategic flaws. The regulator’s crackdown may slow activity temporarily, but experts believe that investor education and knowhow of key challenges shall be proactively underlined.
Ajit Mishra, Senior Vice President of Research at Religare Broking, noted that psychological biases are exacerbating retail losses. “SEBI’s report says that a lesser number of people incurred more losses in FY25. The psychology of averaging their cost in naked calls is adding to their mounting losses. They also don’t have any exit plan in unfavourable situations,” he said.
He further highlighted how market conditions are not in favour of retail option traders: “F&O trading becomes tough in the low VIX-low premium market as there are no wild moves led by volatility. Options are a perishable instrument, which eke out premium consistently as expiry inches closer.”
While Jane Street’s alleged manipulation has put a global spotlight on Indian derivatives markets, SEBI’s findings and expert insights suggest that the real and ongoing issue lies in retail investors treating F&O like a shortcut to wealth, often without the tools, discipline, or education to survive.
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