New Delhi, Oct. 23 -- Retail and wealthy investors are gradually moving away from derivatives trading and turning to broker-funded stock purchases, as higher costs and tighter regulations make derivatives less attractive.

The shift is evident in the rapid growth of margin trading facilities (MTFs), in which brokers lend clients money to buy stocks. To be sure, the sharp growth comes on a low base. The industry-wide MTF book on the National Stock Exchange (NSE) has surged 52% from a year ago to Rs.1.51 trillion as of September-end, even as trading activity in index and stock futures has slowed sharply.

Shares traded on the NSE accounted for 95% of the industry-wide MTF book, with those on BSE accounting for the rest, per exchange data. ...