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CIRCULAR
SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/73 May 19, 2023
To
All Recognized Stock Exchanges
Depositories
Stock Brokers through Recognized Stock Exchanges
Dear Sir/Madam,
Subject - Risk disclosure with respect to trading by individual traders in Equity
Futures & Options Segment
1. Over time there has been increased participation of investors in Indian securities
market, including, in the derivatives segment. While investors are expected to
make investment decisions based on their own due diligence and risk appetite,
it is important to empower them with detailed information about the risks
associated with trading in derivatives.
2. With a view to facilitating informed decision making by the investors trading in
derivatives segment, it has been decided to introduce ‘Risk disclosures’ with
respect to trading in equity Futures & Options (F&O) segment.
3. Accordingly, all stock brokers shall display the ‘Risk disclosures’ given at
Annexure-I on their websites and to all their clients in the manner as specified
below:
3.1. Upon login into their trading accounts with brokers, the clients may be
prompted to read the ‘Risk disclosures’ (which may appear as a pop-up
window upon login) and shall be allowed to proceed ahead only after
acknowledging the same.
3.2. The ‘Risk disclosures’ shall be displayed prominently, covering at least 50
percent area of the screen.
Page 1 of 5
4. All Qualified Stock Brokers (QSBs) shall maintain the Profit and Loss (P&L) data
of their clients on continuous basis as per the format given at Annexure-II. The
P&L data of the clients shall be retained for at least 5 years.
5. Stock Exchanges and Depositories are directed to:
5.1. bring the provisions of this circular to the notice of their members /
participants and also disseminate the same on their websites;
5.2. display the ‘Risk disclosures’ on their respective websites, with a link to study
conducted by SEBI.
6. Applicability: The provisions of this circular shall come into force with effect from
July 01, 2023.
7. This circular is issued in exercise of powers conferred under Section 11(1) of the
Securities and Exchange Board of India Act, 1992, to protect the interests of
investors in securities and to promote the development of, and to regulate, the
securities market.
8. This circular is available on SEBI website at www.sebi.gov.in under the category
"Circulars".
Yours faithfully,
Aradhana Verma
General Manager
Market Intermediaries Regulation and Supervision Department
Tel. No.: +91-022 26449633
Email: aradhanad@sebi.gov.in
Page 2 of 5
Annexure-I: Risk disclosures
RISK DISCLOSURES ON DERIVATIVES
9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
On an average, loss makers registered net trading loss close to ₹ 50,000.
Over and above the net trading losses incurred, loss makers expended an additional 28%
of net trading losses as transaction costs.
Those making net trading profits, incurred between 15% to 50% of such profits as
transaction cost.
Source:
1. SEBI study dated January 25, 2023 on “Analysis of Profit and Loss of Individual Traders dealing in
equity Futures and Options (F&O) Segment”, wherein Aggregate Level findings are based on annual
Profit/Loss incurred by individual traders in equity F&O during FY 2021-22.
Page 3 of 5
Annexure-II: Data Format
A. Equity F&O Segment
Transaction Cost (Rs.)
Realized trading
No. of Profit/Loss
transactions excluding
Client during transaction SEBI
Identifica Product Income period charges during Brokerage + Exchang Stamp turnove
tion No. Period Category Age Gender Group City PIN Code (Buy+Sell) period (Rs.) Clearing Fee e Fee Duty r Fee STT GST
Period 1 Index Futures <20 M <5Lacs
Period 2 Index Options 20-30 F 5-10L
Stock Futures 30-40 Others 10-25L
Stock Options 40-50 Not sepecified
25-50L
50-60 50-100L
>60 >100L
Not Available Not Available
Notes:
1. Client-set: All Individual Clients (which includes HUF and NRIs; excludes Proprietary
traders, institutions, partnership firms etc.)
2. Segment: Equity F&O
3. Period: Financial Year
4. Client level realized trading Profit/Loss during the period is considered.
5. With regard to cases where 1 leg of transaction falls under the period, while the other falls
outside, explanation is given as under-
Example 1: Period: April 2018 to March 2019. Consider Contract-A with expiry in
April 2018.
Contract- A purchased & sold in March 2018 - will not be considered
Contract- A purchased in March 2018, sold in April 2018/ settled on expiry - will be
considered
Example 2: Period: April 2018 to March 2019. Consider Contract-B with expiry in
April 2019.
Contract- B purchased & sold in March 2019 - will be considered
Contract- B purchased in March 2019, sold in April 2019/ settled on expiry - will not
be considered
6. Contracts resulting in physical delivery of stocks may be excluded.
7. For PIN Codes - correspondence address may be considered.
Page 4 of 5
B. Cash Segment
Transaction Cost (Rs.)
Realised
Trading
Profit/Loss
excluding
Client No. of Daily Average transaction
Identific transactions holding value Max. holding charges Brokerage SEBI
ation Income PIN during Period during Period value during during Period + Clearing Exchange Stamp turnove
No. Period Age Gender Group City Code (Buy+Sell) (Rs.) Period (Rs.) (Rs.) Fee Fee Duty r Fee STT GST
Period 1 <20 M <5Lacs
Period 2 20-30 F 5-10L
30-40 Others 10-25L
40-50 Not sepecified
25-50L
50-60 50-100L
>60 >100L
Not Available Not Available
Notes:
1. Client-set: All Individual Clients (which includes HUF and NRIs; excludes Proprietary
traders, institutions, partnership firms etc.)
2. Segment: Cash Segment
3. Period: Financial year
4. Client level realized trading Profit/Loss during the period is considered.
5. For computation of Client level realised profit/loss in cash segment during the period, only
transactions where both legs (buy and sell side) in a scrip are executed during the period,
are considered.
Page 5 of 5
To, Date: 6h July 2023
The Inspection Department
BSE
Fort, Mumbai
Email: bseho. insoectionti bseindia.com
Dear Sir.
Subject: Status of compliance-SEBl Circular on Risk disclosure with respect to trading by
individual traders in Equity Futures & Options Segment
The contents of Risk disclosures is displayed on the website-
(Yes) {Screen Shot attached}
2 Upon login into the trading accounts, the clients are prompted to read the'Risk disclosures' (which
appears as a pop-up window upon login) and is allowed to proceed ahead only after
acknowledging the same. -
(NA) {We are active only in BSE exchanse and we do not have anv active clients in the
Derivative markets, Further we are not usins anv third partv software for Derivative trading. we
are usine BOLT & BOW front end software nrovided bv the Exchanee)
3. The'Risk disclosures' is displayed prominently and covers at least 50 percent area ofthe screen. -
(NA) {We are active only in BSE exchanse and we do not have anv active clients in the
Derivative markets, Further we are not usinq anv third partv software for Derivative tradins. we
are usins BOLT & BOW front end software orovided bv the Exchaneel
4. Maintaining the Profit and Loss (P&L) data ofthe clients on continuous basis as per the format given
at Annexure-Il (ofaforesaid SEBI Circular) and the P&L data ofthe clients will be retained for at least
5 years.
Yes
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CIN: U67120Mt|2001PIC134185
Membcr oI8SE LtDlt d & ifrltl commodtty Exchanae oflndla Llfi{ted
SEBI Rcgn Io.: 1N2000165639
Read. Otke: 297l301, May Bullding,Ground Floor, PIincesssrreet,
Maritre lines (East), M u mbai 400002
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