Proprietary Trading Firms See India Derivatives Profits Fall 3% as Curbs Bite

The cohort, which includes global firms, posted a gross profit of 445 billion rupees in the year ended March, down 3% from a year earlier, according to a study published by the Securities and Exchange Board of India late Thursday. Earnings declined across most trader categories, while losses incurred by individual investors narrowed.

The sweeping restrictions on derivatives trading introduced by SEBI in late 2024 have coincided with a prolonged period of underperformance by Indian stocks relative to regional peers. The benchmark NSE Nifty 50 Index is little changed from two years ago, while soaring energy costs following the US-Iran war dealt a fresh blow to sentiment toward the $5.1 trillion equity market.

“Fiscal 2026 wasn’t an easy year to make money,” said Aishvarya Dadheech, founder and chief investment officer of Fident Asset Management. “Volatility remained elevated and the absence of a clear market trend meant profits declined across investor categories.”

Losses for individual investors before trading costs narrowed to 722 billion rupees from 979 billion rupees a year earlier, the study showed. Foreign portfolio investors remained profitable, though their gross profit more than halved to 139 billion rupees during the period.

The figures also highlight the divide between sophisticated investors and individual traders.

SEBI has previously found that nine out of 10 individual traders lose money in futures and options, despite repeated warnings about the risks of competing against better-funded, more experienced players. The aggregate losses of individual traders were broadly matched by the profits of corporate and institutional participants, the regulator said in the study.

SEBI has increased contract sizes, tightened position limits and introduced other safeguards to limit excessive retail participation, while the central bank has imposed tighter funding rules for proprietary traders and stock brokers.

“The regulatory changes are largely behind us,” Dadheech said. “The measures are beginning to have the intended effect.”