New Delhi, Aug. 3 -- The Delhi High Court will on Wednesday hear a public interest litigation (PIL) that puts the spotlight on a contentious yet under-examined issue in India's Rs.160-trillion futures and options (F&O) market: the fate of interest earned on margin money that traders deposit with brokers.

Investor funds in focus

Every day, millions of Indian traders participating in the fast-paced F&O market have to deposit "margin money" as security against market risk. This capital-locked up for the entire period their position is open, ranging from a day to as long as two months-gets parked by stock brokers, often into fixed deposits or overnight mutual funds.

According to FY24 data from the National Stock Exchange annual report, tra...