Options volumes on NSE, BSE decline over 50% during FY26 after SEBI crackdown

The Securities and Exchange Board of India (SEBI) on Thursday published its annual report for the FY 2025-2026 which showed 52% decline in index options traded across the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

“This significant decline in derivatives volumes during 2025-26 was possibly driven by a series of regulatory interventions including increased contract sizes, the rationalisation of weekly expiries, mandatory upfront premium collection, alongside an increase in the securities transaction tax,” the SEBI report read.

Policy developments initiated by the Indian regulator in FY 2025-26 include formulation of Future Equivalent Open Interest for better measurement of risk in equity derivatives; framework for intraday position limits monitoring; introduction of pre-open session and additional eligibility criteria to introduce derivatives on non-benchmark indices.

However, the combined notional turnover in the equity derivatives segment across NSE and BSE went up by 4.3 per cent to ₹110.4 quadrillion (£862.86 trillion) during the financial year ending March 2026, compared to ₹106 quadrillion in FY2024-25.

The watchdog said the India Volatility Index (VIX), calculated by the NSE to measure the market's expectation of volatility over the next 30 calendar days, increased by 60.7 per cent, climbing from 12.7 to 20.4 index points between March 31, 2025 and April 8, 2025.

SEBI said the spike in India VIX mirrored Cboe VIX, which also rose 134.9 per cent during the same six-day trading period. The India VIX stabilised and maintained a yearly average of 13.7 points in the FY 2025-26, following the initial spike. In March 2026, the index went up by 103.6 per cent triggered by the US-Iran conflict (see chart 1).

Chart 1

Source: SEBI/Bloomberg

NSE recorded 3.2 billion contracts traded last month across index and single stock derivatives, up 11.85% year-on-year, driven by strong momentum in stock options.

The Indian exchange group is exploring a new volatility index with a different in-house computation methodology compared to the existing India VIX, according to a Business Standard report last month.