The Indian stock market is known for its daily fluctuations where billions of rupees change hands, but sometimes a single statement from a regulator can shake the entire market. That is exactly what happened on Thursday, August 21, 2025, when Securities and Exchange Board of India (SEBI) Chairperson Tuhin Kanta Pandey made a remark about the derivatives market. Within hours, heavyweight stocks like Angel one and Bombay Stock Exchange (BSE) witnessed sharp declines, leaving investors rattled.
Shares of Angel one dropped as much as 6.6 percent, while BSE shares fell by nearly 5.6 percent following Pandey’s comments at the FICCI Annual Capital Market Conference in Mumbai. The trigger was his statement highlighting the need to extend the tenure of equity derivatives contracts. What may appear as a technical reform led to a significant shake-up in the market, as investors quickly reassessed the potential implications for brokers and exchanges.
To understand the magnitude of this impact, it is important to first look at the current state of India’s derivatives market. India today accounts for nearly 60 percent of the global equity derivatives market, with massive participation from retail investors. However, SEBI has long raised concerns that retail investors are disproportionately losing money in this highly speculative space. According to SEBI’s latest data, retail investors collectively lost around Rs 52,400 crore in FY24.
On the other hand, proprietary traders earned profits of Rs 33,000 crore, while foreign institutional investors booked gains worth Rs 28,000 crore. This imbalance means that the heaviest losses are being borne by ordinary investors, something SEBI is determined to address.
The biggest impact of this reform chatter was felt by Angel one, The company’s fortunes are closely tied to the futures and options (F&O) segment. Nearly 45 percent of its revenue comes from F&O broking. In July, Angel One’s F&O market share climbed to 21.2 percent, while its equity market share reached 20.1 percent. The company’s CEO, Dinesh Thakkar, had recently expressed optimism that margins could improve to 40 percent by March. But with SEBI signaling tighter regulations, growth expectations are now under pressure.
On August 21,Angel One’s stock tumbled over 6 percent intraday to its lowest level in months, before closing with a 5.79 percent loss. Despite a partial recovery from the day’s bottom, the stock remains nearly 27 percent below its 52-week high. Looking at past performance, the stock has delivered a weekly return of negative 3.83 percent and a one-month negative return of 5.28 percent. However, on a six-month horizon, it has still managed to deliver a positive 8.78 percent return. Over the past year though, the stock is down more than 5 percent.
BSE too faced the brunt of investor selling. After the SEBI chief’s remarks, the exchange’s stock dropped as much as 6.5 percent, closing at Rs 2,363. On a weekly basis, BSE has lost around 6 percent, and over a month, the stock is down nearly 6.5 percent. The concern is that reforms such as extending contract tenure, which could change trading patterns, may reduce the high-frequency speculative trading volumes that exchanges like BSE benefit from.
This is not the first time SEBI has moved toward tightening the derivatives segment. The regulator has previously imposed measures such as limiting contract expiries, increasing lot sizes, and capping end-of-day exposures at Rs 1,500 crore. If contract tenures are extended further, short-term retail traders could face more challenges, altering the dynamics of F&O trading.
While SEBI’s objective is to protect small investors from mounting losses, these reforms could dampen trading volumes, which in turn affects the revenues of brokers and exchanges. It raises two key questions: Will these steps bring more stability to the stock market? Or will they reduce liquidity and profitability for key market intermediaries?
At this stage, the answers remain uncertain. The coming months will be crucial in understanding whether retail investors actually benefit from these changes or whether trading activity sees a slowdown. One fact, however, remains clear—F&O trading is extremely risky. SEBI data itself shows that nine out of ten retail participants lose money in the F&O market. This is why experts, as well as financial advisors, consistently urge investors to be cautious and seek professional guidance before jumping into derivatives trading.
For now, investors in Angel One and BSE have clearly felt the immediate heat of regulatory risk. Whether this turns into a long-term trend will depend on SEBI’s next steps and how market participants adapt to the changing rules of the game.
Disclaimer:
This article is for informational purposes only and should not be considered as investment advice. Stock market investments are subject to risks, and past performance does not guarantee future results. Readers are advised to consult their financial advisor before making any investment decisions.
