Bloomberg · Big Take Asia: How India’s options market imploded
This is a podcast interview (part of Bloomberg’s Big Take Asia podcast series). It summarizes the facts of India’s options boom and bust well, but the podcast misjudges a few issues and misses one entirely.
Savio Shetty (Bloomberg’s India equities reporter and a former derivatives trader) explains the basics well: cheap data, zero-minimum brokerage accounts and weekly expiries of options turned India into the world’s largest options market and resulted in huge losses, especially to individual investors. India’s regulator introduced curbs on options in 2024. Shetty says these curbs “have held.” But SEBI’s own figures suggest otherwise. In the year to March 2026, after the curbs, 78.6 lakh individuals traded derivatives and 87.7% of them lost money, a combined ₹91,685 crore (about $10.4 billion). The average loss, about ₹1.17 lakh ($1,330), was roughly half of India’s GDP per person. The curbs reduced the number of traders, but the damage to individual investors remained significant.
The podcast floats a South Korea-style investor test before trading. Unfortunately, Korea’s experience is not helpful. Korea’s mandatory investor education was already in place when retail traders lost $1.7 billion on leveraged chip ETFs within three months. Trading volume did fall by 94%, but that was principally caused by a cash requirement of 30 million won and mandatory simulated trading.
India’s regulators should not look to lessons from America either. India’s retail derivatives losses came to about 0.28% of GDP in a single year. The best available U.S. estimate, from a study of retail options trades in 2019–2021, works out to about 0.01% of GDP a year, roughly one-thirtieth of India’s share. That study covers only part of the U.S. market, but the gap is too large for the omission to close. American households also have deeper savings, safety nets and other places to invest. India needs protection that limits what each trader can lose relative to their means, as well as additional restraints on brokers, for example, limits on marketing derivatives to first-time and small investors.
One more point. India’s SEBI moved swiftly against Jane Street, an American firm accused of manipulating the Bank Nifty index; the firm denies it, and the case is unresolved. But the derivative casino was built at home. Indian exchanges introduced the weekly expiries, and SEBI approved them. Options supplied 60% of NSE’s revenue in FY26, about ₹9,997 crore, in the same year retail traders lost ₹91,685 crore. Whatever the verdict on Jane Street, the institutions that designed and profited from the market deserve at least as much scrutiny as the foreign firm that exploited it.
Note: Dollar figures are converted at the exchange rates prevailing during the period, about ₹88 per dollar. Shares of GDP and income per person use World Bank figures for 2024.
