India’s derivatives market has seen a weak start to July after the RBI’s stricter funding rules for brokers and proprietary trading firms came into effect on July 1. Early data shows a sharp drop in premium turnover on both BSE and MCX, raising concerns that trading activity may remain under pressure if the trend continues.
On BSE, expiry-day (0DTE) premium turnover on July 2 stood at ₹54,702 crore, down 19% from the Q1FY27 average of ₹67,918 crore and 11% below the June average of ₹61,729 crore. Compared with the first expiry week of June, turnover was down around 24%, indicating a significant slowdown in trading activity.
For one-day-to-expiry (1DTE) contracts, premium turnover on July 1 came in at ₹35,511 crore. This was 9% lower than the Q1FY27 average of ₹38,949 crore and 11% below the June average of ₹39,725 crore. Against the first week of June, volumes dropped by nearly 37%, highlighting the sharp impact on short-dated options trading.
MCX also witnessed a steep decline, with daily premium turnover falling 38.2% in the first two trading sessions of July. Analysts believe the slowdown across both exchanges reflects weaker participation from proprietary traders and market-makers following the RBI’s funding changes.
Under the new RBI norms, bank guarantees used by capital market participants must now be 100% backed by collateral, with at least 50% in cash. The tighter rules reduce leverage available to brokers and proprietary trading firms, increasing funding costs and making several trading strategies less attractive.
Analysts say cash-futures arbitrage, index arbitrage, options market-making and other leveraged strategies could see lower activity under the new framework. While it is still early, the weak start to July has increased the risk of downward revisions to premium average daily turnover (ADTO) estimates if volumes do not recover in the coming weeks.
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