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Zerodha defends F&O access as SEBI flags ₹91,685 crore in FY26 retail trader losses
Zerodha’s Nithin Kamath defended offering F&O and margin trading without promotional dark patterns as SEBI reported steep FY26 retail trader losses. He expects tighter derivatives rules and said Zerodha is diversifying into insurance, lending against securities and asset management.
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The numbers
Figures from NDTV Profit,
| Active F&O participants fell 18% to | 87.5 lakh |
|---|---|
| Average loss among loss-making traders was | Rs 1.47 lakh |
| 88.5% of traders under | 30 incurred losses |
| 73% of traders had annual incomes below | Rs 5 lakh |
Also in the report
- 87.7% of individual F&O traders lost money in FY26
- Options accounted for 92% of individual losses
Why it matters to operators and investors
Zerodha’s moves into insurance, lending against securities and asset management signal attractive partnership or acquisition targets as brokers diversify beyond transaction-led trading income.
What to watch next
- SEBI consultation papers on F&O eligibility, minimum contract values, margin norms, position limits or suitability assessments.
- New requirements governing broker app nudges, derivatives risk warnings, influencer/referral marketing or loss reporting.
- Monthly exchange data showing a material decline in individual F&O participation, premium turnover or active clients after prior rule changes.
- Zerodha disclosures or hiring/product launches in insurance, LAS, asset management, fixed income or wealth products.
- Evidence that brokers raise fees, reduce free tools or limit options strategies in response to compliance and volume pressure.
Likely next moves
Our read of what comes next — analysis, not reported by the source.
- Zerodha is likely to emphasize its no-dark-pattern positioning, expand investor education and make risk disclosures more prominent across derivatives journeys.
- The broker is likely to prioritize cross-selling of mutual funds, bonds, insurance, lending against securities and asset-management offerings to reduce transaction-revenue concentration.
- SEBI may seek additional broker-level data on repeat retail losses, client concentration, margin funding, option turnover and digital solicitation practices.
- Competitors with high F&O dependence may cut acquisition incentives, revise app flows and increase compliance spending before formal rule changes.
The counter-case
The case against this reading — not reported by the source.
The headline risks overstating a broker-specific implication from market-wide loss data. Even if SEBI tightens F&O rules, restrictions could improve industry economics by removing low-value, high-churn activity and favoring larger compliant brokers such as Zerodha. Conversely, Zerodha’s claimed diversification may be less protective than presented: insurance, lending against securities and asset management are competitive, regulated businesses with slower scaling, different risk profiles and potentially lower margins than active-trading revenue. A sharp F&O clampdown could still hurt customer engagement, cross-sell and transaction income before adjacent businesses meaningfully offset the loss.
The source
First seen