Mumbai, Aug. 4 -- India's largest retail-focused brokerages are facing an existential squeeze. After years of explosive growth fuelled by booming futures and options (F&O) trading, a regulatory clampdown has sharply dented volumes, and with them, profits. Now, with margins under pressure and top-line growth fading, brokers are racing to reinvent themselves by expanding into lending, wealth management, and distribution.

The shift comes after a series of regulatory measures by the Securities and Exchange Board of India (Sebi) starting October 2024, aimed at curbing speculative excesses in the booming F&O segment. These included restrictions on weekly index option expiries and tighter margin regulations, which have led to a sharp drop in de...