Zerodha risk disclosure F&O losses SEBI study Kite login investor protection

Why Kite shows the risk disclosure at every login

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Kite shows the SEBI risk disclosure at every login because a SEBI circular requires every stock broker to display it and to let clients proceed only after acknowledging it. The circular, SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/73 dated 19 May 2023 and in force from 1 July 2023, followed a SEBI study finding that 9 out of 10 individual traders in the equity futures and options segment lose money. The disclosure is not a Zerodha choice; it is a regulatory mandate, and Kite implements it as the half-screen pop-up you acknowledge each day.

This article explains the study that produced the “9 out of 10” finding, the circular that turned the finding into a daily login requirement, what the disclosure says and how it must be shown, and why SEBI chose the login moment specifically. The headline statistic is one of the most-cited numbers in Indian retail trading, and it sits behind every Kite login; understanding where it comes from is the point of the disclosure. The reference page for the disclosure text itself is the risk disclosure document .

Conflict-of-interest disclosure. This guide is published by the WebNotes Editorial Team for informational purposes and is written independently. WebNotes operates a Zerodha account-opening referral programme, disclosed on the pages that carry the referral link; this guide does not carry it and earns no referral commission from anything described here.

The SEBI study behind the number

The disclosure exists because of data, not opinion. In January 2023, SEBI published a study of the profit and loss of individual traders in the equity futures and options segment, based on more than one crore unique PANs that traded F&O on the National Stock Exchange . The headline finding was blunt: 89 per cent of individual traders, about 9 out of 10, incurred net losses in FY22, with an average loss of about Rs 1.1 lakh. Only 11 per cent made a profit, averaging about Rs 1.5 lakh. The study also found that loss-makers booked a net trading loss of around Rs 50,000 each, and then spent an additional 28 per cent of those losses on transaction costs, deepening the hole. The number of unique individual traders through the top brokers had risen more than 500 per cent against FY19, so the losses were spreading to a fast-growing pool of new participants. The detailed webnotes treatment of the study sits at 90 per cent of retail F&O traders lose money: the SEBI study .

SEBI did not leave the finding as a one-off. It ran an updated study covering FY22 to FY24, released on 23 September 2024 (PR No. 37/2024), which found 93 per cent of individual traders lost money in equity F&O over the three years, with aggregate losses exceeding Rs 1.8 lakh crore. Only about 7.2 per cent registered a profit over the period, and roughly 1 per cent earned more than Rs 1 lakh after transaction costs. The update confirmed the trajectory: the loss rate did not improve as participation grew; it held or worsened. The “9 out of 10” framing survived because the data kept supporting it.

The circular that made it a login requirement

A study informs; a circular compels. SEBI turned the finding into a binding display rule through circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/73, dated 19 May 2023, which introduced a risk-disclosure framework for individual traders in the equity F&O segment. The circular came into force on 1 July 2023. It requires all stock brokers to display the risk disclosure on their websites and, critically, to surface it at login: “Upon login into their trading accounts, clients may be prompted to read ‘risk disclosures’ appearing as a pop-up window and shall be allowed to proceed after acknowledging the same.” The disclosure must be shown prominently, covering at least half the screen, and the circular directs the exchanges and depositories to carry it on their sites too, with a link to the SEBI study.

The same circular added a data-retention obligation that explains why brokers track trader outcomes at all. The 15 systemically prominent brokers SEBI categorised as qualified stock brokers (QSBs), a set that includes Zerodha, Angel One , and 5paisa , must maintain their clients’ profit-and-loss data continuously and retain it for at least five years, capturing fields like age, income, city, gender, products traded, and transaction charges. So the disclosure you acknowledge at login is the consumer-facing tip of a wider regime that also measures, at the broker level, how F&O clients actually fare.

What the disclosure says and how it is shown

The disclosure carries the study’s own numbers, which is what gives it force. It states that 9 out of 10 individual traders in the equity F&O segment made net losses, that loss-makers on average booked a net trading loss of around Rs 50,000, and that they spent an additional share of those losses, about 28 per cent, on transaction costs. It is not a generic “markets are risky” notice; it is a specific, sourced statistic delivered at the moment a trader is about to act on it.

The format is fixed by the circular. It appears as a pop-up that covers at least half the screen, it must be acknowledged before the client can proceed, and it links through to the underlying SEBI study so a reader can verify the figure rather than take it on the broker’s word. A client cannot disable it, and a broker cannot remove it; acknowledging it is the only path into the platform. On Kite, that is the warning you clear after the two-factor login and before you reach your watchlist each day.

Why the login moment, specifically

SEBI chose login rather than account opening for a reason rooted in behaviour. A disclosure buried in an account-opening form is read once, if at all, and forgotten; the trader who has held the account for two years and is about to place a leveraged options trade never sees it again. Putting the disclosure at every login attaches the warning to the act of trading, not the act of signing up, so the statistic is in front of the trader on the morning they decide to buy a weekly option, every time, not just on day one. The daily forced logout that brokers run, the same one that makes the second login factor a daily event, also guarantees the disclosure is a daily event. The friction is the feature: SEBI is using repetition to keep a uncomfortable fact salient against the optimism that drives F&O participation.

Where this sits in investor protection

The risk disclosure is one of several conduct-focused protections SEBI layers onto the trading relationship, distinct from the cyber-security and grievance machinery. It addresses behaviour: the chance that a retail trader takes derivatives risk without seeing the base rate of loss. That is different from the SEBI cyber-security framework , which protects the systems, and from the grievance escalation matrix and SEBI SCORES , which handle disputes after the fact. The SEBI investor charter and Zerodha investor charter frame the rights around all of it. The risk disclosure is the piece aimed squarely at the decision to trade, and the data it carries, 9 in 10 losing, is the reason it earns a place on the login screen rather than a footnote.

See also

External references

References

  1. SEBI circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/73, dated 19 May 2023, “Risk disclosure with respect to trading by individual traders in Equity Futures & Options Segment” (in force from 1 July 2023).
  2. SEBI study on profit and loss of individual traders in the equity F&O segment, January 2023 (FY22 data: 89 per cent of individual traders incurred net losses; average loss about Rs 1.1 lakh).
  3. SEBI press release PR No. 37/2024, dated 23 September 2024, “Updated SEBI study reveals 93% of individual traders incurred losses in equity F&O between FY22 and FY24; aggregate losses exceed Rs 1.8 lakh crore over three years”.

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Frequently asked questions

Why does Kite show a risk warning every time I log in?
SEBI requires every stock broker to display a risk disclosure on equity F&O trading at login, and to let clients proceed only after they acknowledge it. The rule comes from SEBI’s circular dated 19 May 2023, effective 1 July 2023, after a study found 9 out of 10 F&O traders lose money.
What does the 9 out of 10 figure mean?
SEBI’s January 2023 study found that 89 per cent of individual traders, about 9 out of 10, in the equity futures and options segment incurred net losses in FY22, with an average loss of about Rs 1.1 lakh. Only 11 per cent made a profit.
Which SEBI circular mandates the Kite risk disclosure?
SEBI circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/73, dated 19 May 2023, in force from 1 July 2023. It requires brokers to display the F&O risk disclosure prominently and to make clients acknowledge it at login before proceeding.
Can I turn off the Kite risk disclosure?
No. The disclosure is mandated by SEBI and must be shown and acknowledged at login. A broker cannot remove it, and there is no client setting to disable it; acknowledging it is the only way to proceed into the platform.
Did SEBI update the F&O loss figures?
Yes. SEBI’s updated study, released on 23 September 2024, found 93 per cent of individual traders lost money in equity F&O between FY22 and FY24, with aggregate losses exceeding Rs 1.8 lakh crore over the three years, confirming the earlier finding.
Does the disclosure apply only to F&O traders?
The risk disclosure concerns the equity futures and options segment specifically, where the loss data is starkest. It is shown at login on the trading platform so that anyone who trades, or might trade, F&O sees the data before placing an order.

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WebNotes Editorial Team

The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

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Conflicts of interest
WebNotes is independent. No relationship with any broker, registrar or bank named in this article.