National Stock Exchange of India hit by RBI’s tighter funding rules as derivatives volumes plunge 23%

India’s largest stock exchange just posted its worst derivatives trading month in over a year. The National Stock Exchange saw its average daily notional turnover for derivatives drop 23% to ₹214 trillion (roughly $2.2 trillion) in July 2026, hitting a 17-month low not seen since February 2025. What the new rules actually do The RBI’s regulations target two specific mechanics that kept India’s derivatives machine humming. First, banks are now prohibited from providing funding for proprietary trading. Second, brokers must now hold 100% collateral against any funding they receive. The rules started phasing in during April, giving market participants a few months to adjust. But July marked the first full month under the complete regulatory framework. Overall NSE derivatives turnover fell 2% month-over-month, dropping from ₹43.4 lakh crore in June to ₹42.7 lakh crore in July. That headline number looks modest, but the daily average decline of 23% reveals just how dramatically individual trading sessions have thinned out. BSE picks up what NSE is losing While the NSE was watching its volumes crater, the Bombay Stock Exchange posted an 8.4% increase in derivatives turnover during July co...