<h1>Securities regulator warns ultra-short derivatives trading undermines market health as 91% traders lose Rs 1 lakh crore</h1> India's securities regulator expressed concerns about the growing dominance of ultra-short-term derivatives trading, warning it could undermine capital market health. A regulatory official highlighted that 91% of individual futures and options traders incurred net losses totaling over Rs 1 lakh crore in FY25, funds that could otherwise support responsible investing. The regulator noted that expiry-day index option turnover often exceeds cash market volumes by 350 times, with short-term products contributing little to capital formation while potentially increasing market volatility. The authority has implemented regulatory measures and is considering extending derivative product tenures and maturities. The official emphasized the need to deepen cash equity markets while improving derivatives quality through longer-tenure products. The regulator stressed that preserving investor trust is crucial for healthy capital markets, warning against both unchecked speculation and over-regulation that could stifle legitimate business activities.