A recent study by the Securities and Exchange Board of India (SEBI) has revealed that individual traders in India's equity derivatives segment collectively incurred approximately ₹24,800 crore in transaction costs during the fiscal year 2026. This substantial financial burden persisted even as the overall participation in the segment saw a decline.
Rising Cost Burden Despite Fewer Traders
The SEBI report highlighted a significant increase in the average transaction cost per trader, which rose from ₹26,027 in FY25 to ₹31,628 in FY26. This upward trend in per-trader costs occurred despite a moderation in the number of active individual traders, indicating that those who continued to trade faced a heavier cost burden.
Transaction costs, as defined by the study, encompass various charges including brokerage, Securities Transaction Tax (STT), exchange transaction charges, Goods and Services Tax (GST), and other applicable fees.
Shifting Composition of Costs
The composition of these transaction costs has also undergone a notable shift. The Securities Transaction Tax (STT) emerged as a significantly larger component, accounting for 27% of total transaction costs in FY26, a sharp increase from 13% in FY22. STT collections from individual equity derivatives traders surged from ₹1,291 crore in FY22 to ₹6,645 crore in FY26. While brokerage remained the largest single component, its share decreased from 52% in FY22 to 44% in FY26.
Disproportionate Impact on Loss-Making Traders
The study underscored that transaction costs have a more severe impact on traders who ultimately incur losses. In FY26, transaction costs represented 35% of the gross losses for loss-making traders, a stark contrast to 21% of the gross profits generated by profit-makers. This burden on loss-makers has fluctuated, peaking at 44% of gross losses in FY25 before moderating to 35% in FY26.
Costs Can Flip Profitability
SEBI's analysis also demonstrated how these costs can critically alter trading outcomes. Approximately 4.4 lakh individual traders who registered gross profits in FY26 ultimately became net loss-makers after transaction costs were deducted. While this figure was lower than the 5.3 lakh traders affected in FY25, it still represents a significant portion (5-6%) of net loss-makers, illustrating the material impact of costs on final profitability.
These findings come against a broader backdrop of persistent retail losses in the derivatives market. The SEBI study concluded that 87.7% of individual equity derivatives traders incurred net losses in FY26, with aggregate net losses reaching a staggering ₹91,685 crore. The report emphasizes not only the scale of these losses but also the substantial financial outlay traders face simply through their trading activity, with this burden proving particularly detrimental for those already facing losses.