India's leading discount broking firms, including Groww, Zerodha, Angel One, and Upstox, experienced a notable erosion of active investors in August, collectively losing nearly 7 lakh clients. This trend extended to the first half of 2025, during which these top four firms together saw a significant decline of close to 20 lakh active investors. The downturn was not limited to these major players, as other prominent broking firms such as Mirae Asset Capital, PhonePe Wealth, Sharekhan, Kotak Securities, and Motilal Oswal Financial also reported client declines during the same month.

Market experts attribute this sustained fall, particularly a sharp contraction in futures and options activity, to stringent regulatory measures introduced by the Securities and Exchange Board of India (Sebi) in 2024. These measures include tighter margin requirements, curtailed weekly expiries, steeper capital thresholds, and higher taxation, all of which have collectively made derivatives trading less appealing for retail investors. Additionally, there has been a discernible shift in investor preference towards professionally managed investment avenues, such as mutual funds, portfolio management services (PMS), and alternative investment funds (AIFs), further contributing to the depreciation in active broking clients.

Despite the overall decline among top broking firms, a few players managed to add active clients in August. ICICI Securities notably gained approximately 6,512 active clients, while Paytm Money secured around 11,983 new clients, and SBICAP Securities added nearly 7,400 clients. Smaller players also recorded incremental gains, including Aaritya Broking, Moneywise Finvest, Choice Equity Broking, Religare Broking, Jainam Broking, Yes Securities, IDBI Capital, and Bajaj Financial Securities.

In a related development, Sebi released a simplified format for disclosure documents for portfolio managers on Tuesday, aiming to facilitate ease of doing business. The circular from Sebi detailed that the 'disclosure document' is now divided into two sections: static and dynamic. The dynamic section will contain content that undergoes frequent changes, whereas the static section will include disclosures that do not change frequently, thereby streamlining the process for portfolio managers.