That could mean getting more Indians to use existing products, introducing new ones and expanding into areas such as commodities and margin trading.
The difference can be seen in the numbers. Trading in the regular stock market grew by about 19% a year between fiscal 2020 and fiscal 2026. Options trading, meanwhile, grew by about 60% a year.
Options premiums were equivalent to just 14% of the average amount traded in the cash market each day in FY20. That figure is now close to 70%.
In simple terms, options have gone from being a relatively small part of the market to becoming a huge business.
Part of that growth came because regulators tightened the amount of leverage investors could use in the cash market. Some traders who wanted to take larger leveraged bets moved to options instead.
But there is a limit to how quickly a market can keep expanding. As options become more widely used, Datta expects this penetration-led growth to slow.
That means exchanges and other market infrastructure companies will increasingly have to look for growth elsewhere.
Commodities could be the next big opportunity
One area Datta is watching is commodities.
India already has commodity futures and options, but the market is still much smaller than its equity counterpart. Commodity options premiums are currently only about 7%-8% of equity options premiums.
Commodity futures also have room to grow. In large global markets, the amount traded in commodity futures can be several times the size of the underlying cash market. In India, commodity futures turnover is only about half of daily cash-market turnover.
That gap suggests there is plenty of room for Indian commodity trading to grow as more investors and businesses use these markets.
Investors are still borrowing too little to buy stocks
Another opportunity is margin trading, or MTF.
The idea is fairly simple: instead of paying for a stock entirely with their own money, investors can borrow part of the money from their broker and buy more shares.
India’s MTF market is still relatively small. The total amount invested through MTF is roughly equal to one day’s trading in the cash market.
In developed markets, the comparable figure is around two to two-and-a-half times a day’s cash-market trading, Datta said.
There are limits, however. Brokers have become more cautious about leverage, restricting it to selected stocks and generally keeping borrowing periods short.
Even so, larger companies are increasingly making up the MTF book. Nifty 500 stocks now account for about 77%-78% of MTF activity, up from roughly 73%-74% a year earlier.
More IPOs could mean more money for depositories
A strong pipeline of initial public offerings could also benefit India’s depositories.
When a company goes public, depositories earn fees when its shares are listed. They also receive recurring annual fees for maintaining those securities.
Datta estimates that some of the large IPOs in the pipeline could increase depository earnings by about 3%-5%.
The broader message is straightforward: the options boom has given India’s market infrastructure companies a powerful growth engine. But as that market matures, they will need to find new ways to make money.
Commodities, margin trading and the steady stream of new companies coming to the stock market could provide some of those opportunities.
For the entire discussion, watch the accompanying video
