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India’s Retail Leverage Shifts From Options To Slower MTF
Fewer Indian investors are trading equity derivatives, such as futures and options.
Their total losses have gone down, but the average loss for each remaining trader has risen.
At the same time, more investors are borrowing money to buy and hold shares through Margin Trading Facility, or MTF.
This means people may be moving from fast, short-term bets to slower, borrowed investments.
MTF gives investors ownership of shares, but they pay interest on the money borrowed.
If a share does not rise, the interest still keeps adding to the cost.
Risk can be greater when borrowed money is used on smaller or less-liquid stocks.
Regulators are proposing rules to strengthen brokers and improve reporting.
The article says trading platforms should clearly show how much holding a position will cost before investors buy.
Unique equity-derivatives traders fell to 78.60 lakh in FY26 from 98.10 lakh in FY25, while aggregate losses narrowed.
Average loss per remaining derivatives trader increased to ₹1,16,654 from ₹1,13,913.
The combined NSE and BSE Margin Trading Facility book reached a record ₹1.48 lakh crore on 14 August.
More than half of the MTF book was invested in stocks without listed derivatives, which may be harder to hedge or liquidate.
The article argues that investors need clearer upfront disclosure of financing costs over three, six and twelve months.
- Who
- Indian retail investors, brokers, exchanges, regulators, and derivatives traders; Finance Minister of State Pankaj Chaudhary provided the parliamentary figures.
- What
- Retail leverage appears to be shifting from equity derivatives toward Margin Trading Facility-funded cash-market positions.
- Where
- India’s equity markets, including the National Stock Exchange of India and BSE Limited.
- When
- The figures were reported on 11 August and 14 August, with the article published on September 17, 2026.
- Why
- Higher barriers to derivatives trading appear to have redirected some demand for leverage toward funded delivery positions, while MTF borrowing continues to generate financing costs and risks.
Leverage Has Shifted, Not Disappeared
MTF Concentration Creates Hidden Risks
Overall market risk
Leverage Has Shifted, Not Disappeared
The MTF book represents about 0.32% of total market capitalization, below the comparative figures cited for the United States, China, and Vietnam, so its size alone is not necessarily a bubble warning.
MTF Concentration Creates Hidden Risks
The headline total may conceal important risks in the kinds of securities being funded, the concentration among actual MTF users, and the financing costs carried over time.
Nature of MTF
Leverage Has Shifted, Not Disappeared
Unlike a short-dated option, MTF-funded shares remain pledged in the investor’s own demat account and provide equity ownership rather than exposure to a decaying premium.
MTF Concentration Creates Hidden Risks
MTF replaces the fixed expiry deadline of options with continuing interest costs; a flat position can become increasingly costly even without a sharp price decline.
Risk controls and transparency
Leverage Has Shifted, Not Disappeared
Proposed Securities and Exchange Board of India measures, including higher broker net-worth requirements, NCD funding, exposure rules, and T+1 reporting, could strengthen solvency safeguards.
MTF Concentration Creates Hidden Risks
The article argues that investors also need a prominent rupee-based display of three-, six-, and twelve-month carrying costs before placing an MTF order.
Key facts
- Derivatives traders
- Unique individual traders fell from 98.10 lakh in FY25 to 78.60 lakh in FY26.
- Aggregate derivatives losses
- Losses narrowed from ₹1,11,788 crore to ₹91,685 crore.
- Average loss
- Average loss per remaining trader rose from ₹1,13,913 to ₹1,16,654.
- MTF record
- The combined NSE and BSE MTF book reached ₹1.48 lakh crore on 14 August.
- MTF composition
- ₹75,033 crore was in stocks without listed derivatives, ₹68,766 crore in F&O stocks, and ₹3,794 crore in ETFs.
- Client exposure
- Exposure per active NSE client rose from about ₹20,000 to more than ₹32,000 in twelve months.
- Illustrative carrying cost
- Borrowing ₹75,000 at 15% annually to fund a ₹1 lakh position costs ₹11,250 per year before taxes and fees.









