--- title: "India F&O market map: exchanges, clearing and who trades" description: "The five layers between your order and the other side in Indian F&O, and who really trades, from SEBI's August 2026 study and a dated Nifty chain." source_url: "https://www.rupeecase.com/learn/path-12/module-12-2-india-fo-market-map" --- [Path 12 2 of 9](/learn/path-12/)India's F&O market map: exchanges, clearing, SEBI and who trades[Next 12.3](/learn/path-12/module-12-3-sebi-fo-loss-studies) Every trade has two sides, and SEBI's August 2026 study adds them up. For FY26, before costs, individual traders lost about Rs 72,000 crore in equity derivatives. Proprietary traders made about Rs 44,000 crore of it, and foreign portfolio investors, companies, funds and firms made the rest. The gains and the losses cancel almost to the rupee. I find that more useful than any picture of the market, because it says who sits on which side. This lesson draws the map between them: who makes the rules, who matches the orders, who stands behind each trade, and who actually trades. 3By the end you can 1. Name the five layers between an order and the other side, and what each one does. 2. Say why the buyer and the seller of a future never deal with each other. 3. Read SEBI's category chart and say who gained what the individuals lost, before costs. Watch in the terminal: is my money really invested? A short tutorial on sample data. ## The idea, plainly ### Who makes the rules, who matches the orders, who stands behind each trade Think of a trade as a parcel passing through five hands. SEBI writes the rules. The exchange, NSE or BSE, lists the contract and runs the order book that matches buyers with sellers. After a match a clearing corporation, NSE Clearing or BSE Clearing, becomes the counterparty to both sides. It takes margin and settles gains and losses between members every day. Under it sit the members. A trading member is the broker who takes your order, and it clears through a clearing member that settles with the clearing corporation. At the bottom are the clients. NSE lists futures and options on six indices and more than two hundred shares. BSE lists contracts on indices such as the Sensex and on shares. Five layers sit between your order and the other side NSE and BSE each have their own clearing corporation, NSE Clearing and BSE Clearing. Prop desks trade through a member too, with the member's own money. Source: SEBI, Master circular for stock exchanges and clearing corporations; NSE Clearing, clearing mechanism. As of 16 Oct 2026. Read 2 more paragraphs, 107 words The map has three consequences for a trader. Margin travels up the chain, from your account to the broker to the clearing member to the clearing corporation. The risk you carry against the other side is a risk on the clearing corporation, not on a stranger who may not pay. And public data comes in categories, never in names. One detail makes the exchange files readable later. A broker tags every order as its own, called Pro, or as a client's, and the clearing corporation keeps the two positions apart. NSE's evening participant file groups open interest as Client, DII, FII and Pro. [Module I07](/learn/path-15/module-15-6-participant-wise-open-interest) reads it. ### Who actually trades SEBI's August 2026 study splits the market by category. Individuals, meaning retail and high net worth traders together, are a large crowd with a narrow footprint. They are most present in index options, where they were about 38% of turnover in the last quarter of FY26, and least in stock futures, at about 13%. Prop traders, FPIs, funds, companies and firms are fewer and bigger. A prop trader trades the member firm's own money. Individuals are over a third of index options turnover and a sliver of stock futures Share of each segment's turnover traded by individuals in the last quarter of FY26, January to March 2026. The rest is traded by prop firms, FPIs, funds, companies and other categories. Source: SEBI, Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26), Aug 2026, chart 7. As of 20 Aug 2026. ### Where the money landed Derivatives are close to zero sum before costs, so every rupee of individuals' loss reached someone else as a gain. In FY26 it reached mostly prop traders and foreign portfolio investors, and more than nine tenths of the individuals' loss came from options. About three quarters of the prop category's gross profit went to ten firms, and 99% of the gross profit of FPIs and prop traders came from entities that used algorithms. Few individuals do, and SEBI says even that count overstates real algo use, because it includes positions a broker's system squared off. Before costs, individuals lost what the other categories gained Gross profit or loss of each category in FY26, before transaction costs, on squared off positions. The bars add to zero within rounding. Source: SEBI, Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26), Aug 2026, chart 19. As of 20 Aug 2026. Read one more paragraph, 56 words Who sells the options that individuals buy? The files do not name the seller of any one option. NSE publishes four categories of open interest at the close, and SEBI's study shows which categories ended with the gross profit. That is the honest answer to who the option sellers are, and [module A18](/learn/path-15/module-15-8-who-is-on-the-other-side) takes it further. ## Worked example: one order through five hands Follow one order for one lot of the June Nifty future on 10 Jun 2026. The future settled at 23,240.10, so a lot of 65 units was worth Rs 15.11 lakh. | Step | What happens | Who | | --- | --- | --- | | 1 | A client places a buy order in the broker's app | Client | | 2 | The broker checks the margin in the client's account and sends the order to the exchange | Broker | | 3 | NSE matches it with a sell order from some other participant. The exchange does not know why either side is trading | NSE | | 4 | After the match NSE Clearing becomes the seller to the buyer and the buyer to the seller | Clearing | | 5 | NSE Clearing sets margin for the clearing member, which collects it from the broker, which collects it from the client | Clearing | | 6 | At the close the day's gain or loss is settled between members through the clearing corporation and shows in the client's account | All | Two things to see. After step 4 the buyer's counterparty is NSE Clearing, not the seller, and that is why neither has to trust the other. And the broker earned its charge at step 2 whichever way the trade ends. ## The common mistake The belief: My broker is on the other side of my trade, so it wins when I lose. An order on an exchange goes to the order book and meets another participant's order. The clearing corporation then stands between the two and neither wins nor loses on the price: it holds margin on both sides. What the broker earns is a charge on each trade, win or lose, and brokerage was the largest part of individual traders' costs in FY26. The money lost on the price went to the other side, and in SEBI's FY26 data that side was mostly prop traders and FPIs. A broker's income rises with activity, which is not the same as rising with your losses. The term this section turns on: Clearing corporation From the module glossary; every term is in the Learn glossary too. Source: Module 12.2, India's F&O market map: exchanges, clearing, SEBI and who trades. ## Key takeaways * SEBI writes the rules. Exchanges match orders. Clearing corporations stand between buyer and seller. * Brokers take orders and margin. Clearing members settle with the clearing corporation. * Individuals were the only major category with a gross loss in FY26. * Before costs one category's loss is another's gain. Prop traders and FPIs gained most. * Exchange files show four categories of open interest, not the seller of any one option. * A broker earns on activity, not on your loss. Watch in the terminal: why did my broker refuse an order? A short tutorial on sample data. **Before you trade.** Derivatives trading carries a high risk of loss. SEBI's study "Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26)" (August 2026) found that 87.7% of individual traders in equity F&O made net losses in FY26, with aggregate net losses of Rs 91,685 crore. [Read the SEBI study](https://www.sebi.gov.in/reports-and-statistics/research/aug-2026/study-profitability-of-individual-traders-in-the-equity-derivatives-segment-fy25-fy26-_103835.html) What does India's F&O market map: exchanges, clearing, SEBI and who trades cover?SEBI, the exchanges, the clearing corporations and your broker, and which categories of traders sit on each side of the market. It works through The idea, plainly, Worked example: one order through five hands, The common mistake, Key takeaways. It is module 12.2 of Path 12, Derivatives Basics and Rules, about 8 minutes of reading, free. AF&O on RupeeCase ## Hedging only, in development F&O at RupeeCase will do one job: protect a portfolio you already own, by a rule published before it runs. No speculation, no naked option selling, no leveraged bets. It is not available yet. [How hedging will work](/hedging)[Sign up for RupeeCase](https://invest.rupeecase.com/signup) [No hedgeFalls with the marketWith a putA floor, for a premiumIllustration with made up numbers, not a product and not a recommendation.](/hedging) QQuick check ## 10 questions, 7 to pass. Each attempt draws 10 of the 15 questions in this module's bank, and a retake draws a fresh set. A pass gives this module's Certificate of Completion. Your result stays on this device and counts towards the Path 12 certificate. 7 of 10 correct passes module 12.2 Every answer is explained when you check; a retake is always free. Source: RupeeCase Learn quiz rules (70% to pass). Passed ### Certificate ID Download PNGPrint or save as PDF[Check the ID](/learn/certificates/verify) Self paced and unproctored. A record of completing free education by RupeeCase; not a NISM certificate and not endorsed by NISM, NSE, BSE or SEBI. It qualifies no one to deal, advise or publish research. CCheck yourself ## Path 12 so far. Your quick check results on this device, stop by stop. Stop 2 of 9 on Path 12 Derivatives Basics and Rules: every live stop, this module ringed. Source: RupeeCase Learn, Path 12. 1. [12.1Why derivatives exist: forwards, futures and options in one storyNot yet](/learn/path-12/module-12-1-why-derivatives-exist) 2. [12.2India's F&O market map: exchanges, clearing, SEBI and who tradesNot yet](/learn/path-12/module-12-2-india-fo-market-map#quiz) 3. [12.3Read SEBI's loss studies before your first tradeNot yet](/learn/path-12/module-12-3-sebi-fo-loss-studies) 4. [12.4Contract specs that matter now: lots, expiry days, strikes and settlementNot yet](/learn/path-12/module-12-4-contract-specs-lots-and-expiries) 5. [12.5Margins without jargon: SPAN, exposure, expiry day margin and upfront premiumNot yet](/learn/path-12/module-12-5-fo-margins-explained) 6. [12.6The real cost of a trade: STT, exchange fees, SEBI fee, GST and stamp dutyNot yet](/learn/path-12/module-12-6-cost-of-an-fo-trade) 7. [12.7Position sizing and risk of ruin for F&O beginnersNot yet](/learn/path-12/module-12-7-position-sizing-and-risk-of-ruin) 8. [12.8Red flags in F&O: tip groups, too good claims and registration checksNot yet](/learn/path-12/module-12-8-fo-red-flags) 9. [12.9Behaviour in F&O: loss chasing and what SEBI's behaviour study foundNot yet](/learn/path-12/module-12-9-fo-trading-behaviour) 10. [TPath test, 30 questionsNot yet](/learn/path-12/module-12-9-fo-trading-behaviour#pathTestSection) Path 12 in reading time: 72 minutes over 9 modules Minutes of reading per module, this one in amber. Source: RupeeCase Learn, Path 12. Explore next ## Put the module to work. * [ToolOption payoff builderLegs on a dated Nifty chain, breakevens and charges](/learn/tools/payoff-builder) * [Free module 12.1Why derivatives exist: forwards, futures and options in one story8 min read](/learn/path-12/module-12-1-why-derivatives-exist) * [Free module 12.3Read SEBI's loss studies before your first trade8 min read](/learn/path-12/module-12-3-sebi-fo-loss-studies) * [Free module 12.5Margins without jargon: SPAN, exposure, expiry day margin and upfront premium8 min read](/learn/path-12/module-12-5-fo-margins-explained) * [Free module 15.6Participant wise OI and FII derivatives data, read honestly8 min read](/learn/path-15/module-15-6-participant-wise-open-interest) * [Free module 15.8Who is on the other side in India10 min read](/learn/path-15/module-15-8-who-is-on-the-other-side) Community ## Join my WhatsApp group. Scan the code, fillFill one short form, and join my WhatsApp group. Slides, sources, factsheets and the rebalance logs live there, and members join a daily Google Meet with me. New to RupeeCase? [Getting started](/getting-started) [See the terminal](/terminal) [Sign up for RupeeCase](https://invest.rupeecase.com/signup) [Join the WhatsApp group](https://forms.gle/C6HMtM1Z2GfeocQV7) [One form, one group](https://forms.gle/C6HMtM1Z2GfeocQV7)Scan with your phone camera SSources ## Go to the source. 6 sources, NSE the most cited The publisher of each source listed below. Source: Module 12.2 source list. 1. [SEBI, Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26), Aug 2026](https://www.sebi.gov.in/reports-and-statistics/research/aug-2026/study-profitability-of-individual-traders-in-the-equity-derivatives-segment-fy25-fy26-_103835.html) SEBI 2. [NSE Clearing, Clearing mechanism for equity derivatives (clearing members, trading members, proprietary and client positions)](https://www.nseclearing.in/clearing-settlement/equity-derivatives/clearing-mechanism) NSE 3. [NSE Clearing, Margins for equity derivatives](https://www.nseclearing.in/risk-management/equity-derivatives/margins) NSE 4. [SEBI, Master circular for stock exchanges and clearing corporations, 30 December 2024](https://www.sebi.gov.in/legal/master-circulars/dec-2024/master-circular-for-stock-exchanges-and-clearing-corporations_90353.html) SEBI 5. [NSE, About equity derivatives](https://www.nseindia.com/static/products-services/about-equity-derivatives) NSE 6. Hull, J., Options, Futures, and Other Derivatives, Pearson (the chapters on the mechanics of futures markets, clearing houses and margins) Book GTerms ## 6 terms from this module. Clearing corporationThe body that becomes the counterparty to both sides after a match, takes margin and settles gains and losses. NSE Clearing and BSE Clearing are the two. Trading memberA broker with access to the exchange. It takes client orders and sends them to the order book. Clearing memberA member that settles with the clearing corporation for the trading members that clear through it. Proprietary traderA firm trading its own money through its own member account. NSE's participant file calls the category Pro. Foreign portfolio investorAn overseas investor registered to trade Indian markets. NSE's participant file calls the category FII. Open interestThe number of contracts still open at the close, counted once for each buyer and seller pair. NSE's day file counts it in units. [All 230 terms in the glossary](/learn/glossary) [Question people askWho are the market makers and option sellers in India?A short answer with a dated chart](/learn/questions/who-are-option-sellers-india)[Related module12.1 Why derivatives exist: forwards, futures and options in one story8 min, Beginner](/learn/path-12/module-12-1-why-derivatives-exist)[Related module12.3 Read SEBI's loss studies before your first trade8 min, Beginner](/learn/path-12/module-12-3-sebi-fo-loss-studies)[Pillar guideDerivatives and Quant115 modules across paths 12 to 19](/learn/derivatives) Education only, not investment advice, a research report or a recommendation to buy, sell or hold any security. RupeeCase (QC Alpha Technologies Pvt Ltd) is not registered with SEBI as an investment adviser or research analyst. Contracts and prices shown are for illustration only, come from NSE end of day files at least 30 days old, and are not recommendatory. Derivatives trading carries a high risk of loss.