Algo share of NSE turnover
| Measure | FY15 | FY20 | FY25 | FY26 |
|---|---|---|---|---|
| Algo share, equity derivatives | — | — | About 70% | About 67% (to November) |
| Algo share, cash market | — | — | 54% | 54% (to November) |
| Co-location share, equity futures | 33% | 34% | 50% | 51% |
| Co-location share, equity options (premium) | 46% | 49% | 53% | 53% |
| Co-location share, cash market | 22% | 32% | 37% | 39% |
Sources: algo shares are NSE data as reported by NiftyTrader (June 2025) for FY25 and in QuantInsti's release of 16 January 2026 for FY26 to November 2025; co-location shares are from NSE's corporate presentation of May 2026, with options on premium turnover.
The pattern is consistent across segments: the co-location share has risen in every segment since FY15, fastest in equity futures and the cash market. Equity options rose least because they were already heavily automated, as market makers quote hundreds of strikes at once, which is only possible with automation.
Who the algo traders are
| Participant | Role in algo trading | Evidence |
|---|---|---|
| Proprietary trading firms | Market making, arbitrage and high-frequency strategies from co-located servers | 50.7% of NSE equity options premium turnover and 31.9% of equity futures turnover in FY26 |
| Foreign portfolio investors | Systematic and arbitrage strategies, mostly through algos | With proprietary traders, 99% of their FY26 gross profits in equity derivatives came from algo entities |
| Domestic institutions | Execution algos for large orders | Share not separately published |
| Individuals | Rule-based strategies through broker APIs and platforms | Covered by SEBI's retail algo framework, in force since 1 April 2026; share not separately published |
Co-location is the infrastructure behind most of this. Servers in NSE's data centre handled 51% of equity futures turnover and 53% of equity options premium turnover in FY26, according to NSE. Our guide to high-frequency trading in India explains how it works.
Where the profits went: SEBI's FY26 study
SEBI's study of equity derivatives for FY25 and FY26, published on 20 August 2026, gives the clearest picture of who earns from algo trading.
| Participant | FY26 outcome |
|---|---|
| Proprietary traders | Gross trading profit of about ₹44,000 crore |
| Foreign portfolio investors | Gross trading profit of about ₹14,000 crore |
| Individual traders | Net loss of ₹91,685 crore after costs; 87.7% lost money |
SEBI reported that 99% of the gross profits of FPIs and proprietary traders came from entities using algorithmic trading. Individuals paid about ₹25,000 crore in transaction costs in each of FY25 and FY26, and about ₹1 lakh crore across FY22 to FY26.
Retail participation is falling
| Measure | FY25 | FY26 |
|---|---|---|
| Active individual F&O traders | 98.1 lakh to 106.2 lakh, depending on the measure | 78.6 lakh to 87.5 lakh |
| New individual F&O traders | 34.3 lakh | 20.8 lakh |
| Individual traders making a net loss | 90.9% | 87.7% |
| Aggregate net loss of individuals | ₹1,11,788 crore | ₹91,685 crore |
NSE's active client base across all segments fell about 7% in FY26, from 4.92 crore to 4.57 crore, according to NSE data reported by IANS in April 2026. The decline followed SEBI's October 2024 measures on index derivatives: larger contracts, one weekly expiry per exchange and upfront premium collection.
Proprietary and individual shares of turnover
NSE's Market Pulse shows proprietary traders' share of equity options premium turnover rising from 49% in FY25 to 50.7% in FY26, while their share of equity futures turnover fell from 34% to 31.9%. Individuals' share of options premium turnover rose from 35% to 37.5%, and their share of cash market turnover was 33.4% in FY26, against 34% in FY25.
What SEBI's 2025 framework changes
SEBI's circular of 4 February 2025, in full effect since 1 April 2026, set out a full framework for retail algo trading.
- Algos offered to retail traders must be registered with the exchange and carry an Algo ID on every order.
- Algo providers must be empanelled with the exchanges and act as agents of the brokers; brokers are responsible for every algo order.
- Traders' own code that stays below the exchange threshold of 10 orders a second does not need separate algo registration.
- API orders need a registered static IP, two-factor login and a daily logout.
- Brokers may not advertise the past or expected returns of any algo.
The framework makes retail algo activity traceable, so future NSE and SEBI reports may be able to separate retail algo turnover from institutional algo turnover, which published data does not yet do. Our guide to SEBI's algo trading rules covers the framework.
What this means for individual traders
- Speed is not the retail edge. Co-located firms react in microseconds; retail strategies work on rules that hold over minutes to days. See why retail traders cannot do HFT.
- Costs decide outcomes. Individuals paid about ₹25,000 crore in transaction costs in FY26. Fewer, better-planned orders and limit orders cut the bill. Our brokerage calculator shows the cost of a trade.
- Rules reduce impulse trades. Automated strategies with fixed entries, exits and an MTM stop loss follow the same rules every time, which removes impulse trades.
- Test first. Backtesting and paper trading show whether a strategy works before real money is at risk.
Related guides
- Expiry day volume analysis: where index option turnover concentrates on expiry days
- Best brokers for algo trading: API costs, rules and uptime by broker
- SEBI rules for algo trading: the retail framework in full
- What is algo trading?: how automated trading works in India
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Frequently asked questions
What percentage of trading in India is algorithmic?
About two-thirds of NSE equity derivatives turnover and 54% of cash market turnover in FY26 to November 2025, according to NSE data.
Who makes money from algo trading in India?
SEBI's FY26 study found that proprietary traders earned about ₹44,000 crore and FPIs about ₹14,000 crore in gross profits in equity derivatives, with 99% of those profits coming from algo entities.
Is retail algo trading growing?
Retail F&O participation fell in FY26, with active individual traders down 18% on SEBI's main measure. Retail algo use is not separately published, but SEBI's 2025 framework now tags every retail algo order, so future data should show it.
Is algo trading legal for retail traders?
Yes, through a SEBI-registered broker, using algos registered with the exchange or your own code below the order-rate threshold. See SEBI's algo trading rules.
Sources
- NSE, corporate presentation, May 2026 (co-location share of turnover by segment, FY15 to FY26) (nseindia.com)
- NSE data on algo share of turnover, as reported by NiftyTrader, 2 June 2025, and in QuantInsti's press release of 16 January 2026
- NSE, Market Pulse, April 2025 and April 2026 (client category shares of turnover, FY25 and FY26)
- SEBI, studies on profitability and trading behaviour of individual traders in the equity derivatives segment, FY25-FY26, press release 50/2026, 20 August 2026 (sebi.gov.in; loss, active-trader, profit and cost figures checked against the studies on 20 October 2026)
- SEBI, circular on safer participation of retail investors in algorithmic trading, 4 February 2025, and glide-path circular of 30 September 2025
- IANS, "NSE's active investor base tanks 7 pc in FY26", 14 April 2026 (ianslive.in)