The latest data from SEBI suggests that retail investors are losing $12 billion a year in futures and options trading, said Saurabh Mukherjea, Founder of Marcellus Investment Managers.
“Typically, the person losing this money is a 30–40-year-old male from small-town India, and the average such investor is losing about ₹1 lakh annually,” added Mukherjea.
Those stark remarks, made during a recent episode of the Coffee & Investing podcast, have reignited debate around one of India’s least-discussed financial fault lines: the growing retail participation in the futures and options (F&O) market.
The scale of the problem, he explained, is not anecdotal. It is backed by hard data from the Securities and Exchange Board of India (SEBI). Despite the surge in trading apps, easy leverage, and social-media-driven “easy money” narratives of quick profits have masked a far more troubling reality—one where retail investors are consistently on the losing side of the trade, year after year.
Why trading is not beneficial for the Indian middle class?
Mukherjea stressed that this is not a market accident but a structural imbalance. On one side are retail traders — often first-generation investors using mobile apps from small towns. On the other are institutional desks equipped with high-frequency systems, vast datasets, and algorithmic models designed by specialists with deep mathematical and statistical expertise.
“This is essentially a transfer of $12 billion a year from the pockets of India’s lower middle class to institutional traders on Wall Street, who use state-of-the-art algorithms built by PhDs in maths and physics. Money is being transferred from people trading on their phones while sitting at chai and paan shops to the elite on Wall Street and to the Indian elite. This is money that could have gone into consumption but hasn’t.,” he said.
According to SEBI’s research, nearly 90% of retail F&O participants lose money, making it one of the most value-destructive financial activities for households that need long-term wealth creation the most. The demographic hit hardest is the 30–40-year-old middle-class earner, often juggling EMIs, family responsibilities, and limited savings.
Mukherjea’s most striking assertion cuts through the hype surrounding derivatives trading: if a trader does not possess a measurable edge, they are not competing — they are facilitating trades for others.
In simpler terms, retail traders are not participants in the game; they are the fuel that keeps it running.
He further urged policymakers to seriously curb F&O trading.
“Acting on gambling made sense from a consumer perspective and helped the economy; about $8 billion could flow back into consumption. But we also need to stop this $12 billion annual transfer from retail F&O investors to the elite. That would help the economy and is also the fair thing to do,” he noted.
Mukherjea further explained – “If SEBI applies even limited curbs on F&O, the economy could gain $10–12 billion. Add the GST cut of September 22, 2025, and the February 1, 2025 income-tax relief (no tax below ₹12 lakh), and the total stimulus comes to about ₹6.3 trillion, or 1.8% of GDP. If the F&O curbs don’t happen, the boost is closer to 1.6% of GDP, which is still meaningful—roughly what was taken from the middle class between 2019 and 2025. Over the next six months, more money should reach middle-class pockets as excess taxation is unwound. With F&O curbs, the boost could reach 1.8% of GDP—a big deal—and help recover what the middle class lost between 2019 and 2025.”
The podcast has reignited calls for greater investor education, stricter guardrails, and a renewed focus on long-term investing over speculative trading. As Mukherjea’s warning makes clear, unless the bleeding is addressed, India’s F&O boom may continue to enrich global institutions — at the cost of household financial security.
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