The aggregate losses of individual traders in the equity futures and options (F&O) segment exceeded Rs 1.8 lakh crore over the three-year period between FY22 and FY24, a new study by the Securities and Exchange Board of India (SEBI) showed on Monday.

Over nine out of 10 individual traders in the equity futures and options segment continue to incur significant losses, revealed the study, adding that despite consecutive years of losses, more than 75 per cent of loss-making traders continued trading in F&O.

The proportion of young traders (below 30 years) in the F&O segment rose from 31 per cent in FY23 to 43 per cent in FY24.

Moreover, individuals from beyond top 30 (B30) cities made up over 72 per cent of the total F&O trader base, a higher proportion compared to mutual fund investors, 62 per cent of whom are from B30 cities.

About 93 per cent of over 1 crore individual F&O traders incurred average losses of around Rs 2 lakh per trader (inclusive of transaction costs) during the study period.

Top 3.5 per cent of loss-makers, approximately 4 lakh traders, faced an average loss of Rs 28 lakh per person over the same period, inclusive of transaction costs.

Only 1 per cent of individual traders managed to earn profits exceeding Rs 1 lakh, after adjusting for transaction costs, the findings showed.

The SEBI study found that in contrast to individual traders, proprietary traders and Foreign Portfolio Investors (FPIs) as a class booked gross trading profits of Rs 33,000 crore and Rs 28,000 crore, respectively in FY24 (before accounting for transaction costs).

Against this, Individuals and others incurred a loss of over Rs 61,000 crore in FY24 (before accounting for transaction costs).

Most of the profits were generated by larger entities that used trading algorithms, with 97 per cent of FPI profits and 96 per cent of proprietary trader profits coming from algorithmic trading, said the study.

On an average, individual traders spent Rs 26,000 per person on F&O transaction costs in FY24.

Over the three-year period from FY22 to FY24, individuals collectively spent about Rs 50,000 crore on transaction costs, with 51 per cent of these costs being brokerage fees and 20 per cent being exchange fees.