Shankar Sharma, a veteran investor, recently called out the exorbitant cost of options trading in the Indian stock market, using it to highlight the unchecked pricing power held by monopolistic institutions in India’s capital markets — the National Stock Exchange (NSE) and the BSE.
Despite not being government-owned, these exchanges operate as state-enabled monopolies, that control the infrastructure on which India’s entire trading ecosystem depends.
Shankar Sharma in a post on X on July 9, said, “One thing I can categorically say: trading options in India is frightfully expensive compared to other markets (I do both). Trading charges in India eat away returns massively. And that goes to SE bottomlines, out of investors’ pockets.”
He called this a misuse of a monopolistic gift by the government of India.
India’s Derivatives Boom
India is the world’s largest derivatives market, accounting for nearly 60% of the 7.3 billion equity derivatives traded globally in April, according to the Futures Industry Association. This landscape is dominated by the NSE with nearly 95% of derivatives trading volume, with BSE trailing distantly.
The rise in the options market comes despite massive losses that investors suffer. A study released by the Sebi on Monday showed retail investor losses on derivative trades widened by 41% to ₹1.06 trillion in 2024-25.
The rapid growth in derivatives trading—driven largely by retail investors—has prompted Sebi to limit the number of contract expiries and increase lot sizes to make such trades more expensive.
Sharma’s tweet underscores a core problem: when monopolies are operated without regulatory caps on profit margins, the end user — the investor—pays the price.
His argument is rooted in a long-standing economic principle — monopolies must be regulated not just in terms of conduct, but also in profit. With sectors like power, telecom, and even railways having pricing oversight, the question remains, as raised by Sharma — Why should exchanges be exempt?
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