MUMBAI, Sep 10: The National Stock Exchange (NSE) is approaching its much-awaited IPO at a time when its options trading business is losing some momentum, creating a challenge for future revenue growth.
NSE continues to be the dominant player in India’s derivatives market, but its share of equity options trading has declined significantly in recent years. Its share fell from 96.9 per cent in FY24 to 87.4 per cent in FY25 and 74.71 per cent in FY26.
The decline is important because options trading is a major source of income for NSE, contributing more than 60 per cent of its revenue. The exchange’s options premium turnover also fell by more than 12 per cent year-on-year in August, reflecting weaker activity in the segment.
The slowdown is mainly linked to tighter regulations on futures and options trading. Measures aimed at reducing excessive speculation and protecting retail investors have resulted in lower participation and trading activity in the derivatives segment.
This trend could affect NSE’s revenue and profit growth if options volumes remain under pressure. With NSE already holding a very high share of India’s cash equity market, the exchange has limited room to depend on further market-share gains in that segment.
The changing trading environment is also influencing expectations around the NSE IPO. Major shareholders have reduced the number of shares they plan to sell, bringing the proposed offer size down from around 6 per cent of NSE’s equity to about 5.2 per cent, according to reports.
Despite these challenges, NSE remains India’s leading stock exchange and has a strong position across equities, derivatives, clearing and other market infrastructure services.
For NSE, the key challenge will be to reduce its dependence on options trading and build growth through other businesses as regulations and investor behaviour continue to evolve. For IPO investors, the changing derivatives market will be an important factor to watch while assessing the exchange’s long-term growth prospects.