Yesterday, various key decisions taken at Sebi’s board meet to curb retailers participation in F&O.
https://economictimes.indiatimes.co...ofinterest&utm_medium=text&utm_campaign=cppst
*************** ALL MOST ALL TRADERS ARE UNHAPPY WITH IT. THIS THREAD IS FOR DISCUSSION/SHARING THOUGHTS ABOUT THAT MATTERS AS POLITELY AS POSSIBLE AND BEWARE OF FUTURE DEVELOPMENTS *************
I want to share, some inner thoughts which come to mind...
SEBI wants to move F&O volumes to CASH. Who will be most benefited by this? Ans is Govt.
STT is much higher in cash market than F&O. Moreover, in cash, a swing trading for few days will cost much more STT as it is the delivery trade.
Govt just introduced 10% on LTCG tax on shares. Now is that necessary to impose more tax burden to traders in terms of more STT, especially for 90-95% of losing traders? I know good profit makers don't care so much, but they are very less in percentage.
***********
SEBI is thinking two way to shift the volumes:-
1. Idea 1.-> "Individual investors may freely take exposure in the market(cash and derivatives) up to a computed exposure based on their disclosed income as per their Income Tax Return(ITR) over a period of time. "
I think this logic has many a flaw, as in India only a few people under tax bracket. Anyone can make disclosed income is just below the maximum limit to file a compulsory ITR return, say 2.5 lakh. So it is difficult to ban retailers from trading F&O completely. Also, it will be very difficult for RMS for brokers to maintain such individual limits.
In the same way, there will be a maximum limit for the higher income traders group too. How they can limit volumes to few successful pro traders!? Or there will be the different rule for them, like diff income tax slabs.
Anyway, this is very tough to implement, so SEBI has another idea, this is easy to implement and more dangerous.
2. Idea 2. ->
"Accordingly, existing criteria like market wide position limit and median quarter-sigma order size shall be revised upward from current level of INR 300 crore and INR 10 lakh respectively to INR 500 crore and INR 25 lakh respectively. An additional criterion, of average daily ‘deliverable’ value in the cash market of INR 10 Crore, has also been prescribed. "
This is more dangerous as "average daily ‘deliverable’ value in the cash market of INR 10 Crore" will remove many good traders friendly stocks from F&O section like DISH TV etc. SEBI indirectly trying to ban 'positional shorting' also in as many stocks as possible by limiting the F&O list also. Many F&O will fail to meed 10Crore criteria.
https://www.nseindia.com/products/content/equities/equities/eq_security.htm
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Another easy but really dangerous for retail traders is bigger lot size of 25lakh. With bigger lot size the chance of wipeout is faster without much experience or time spent in the market. Also, small capital swing traders will try to do intraday(cash) trading which will be more dangerous to them. Everyone know day trading is the most difficult way to make money bcoz of much more short-term noises (at least than few days positional swing trading). So why SEBI is forcing retail traders to trade in intraday cash (as delivery trading attached with much more STT)? Also, in absence of F&O intraday shorting in huge volumes in low liquid stocks can attract huge penalty(due to short delivery) to retail traders! Short delivery can attract huge loss in auction market including the penalty. I really doubt SEBI is really concerned about the risk exposure of retailers money?
If SEBI really wants to protect retailers, then the easiest way is to reduce lot size, this will provide more liquidity to the market too. But it seems the collection of more STT and shifting the volume in cash is the hidden agenda!
If not what else!
Share your views, traders........
This time SEBI is serious,
SEBI already reaches out to the exchanges and large brokerage houses for suggestions. So, don't take it lightly.
https://economictimes.indiatimes.co...ofinterest&utm_medium=text&utm_campaign=cppst
*************** ALL MOST ALL TRADERS ARE UNHAPPY WITH IT. THIS THREAD IS FOR DISCUSSION/SHARING THOUGHTS ABOUT THAT MATTERS AS POLITELY AS POSSIBLE AND BEWARE OF FUTURE DEVELOPMENTS *************
I want to share, some inner thoughts which come to mind...
SEBI wants to move F&O volumes to CASH. Who will be most benefited by this? Ans is Govt.
STT is much higher in cash market than F&O. Moreover, in cash, a swing trading for few days will cost much more STT as it is the delivery trade.
Govt just introduced 10% on LTCG tax on shares. Now is that necessary to impose more tax burden to traders in terms of more STT, especially for 90-95% of losing traders? I know good profit makers don't care so much, but they are very less in percentage.
***********
SEBI is thinking two way to shift the volumes:-
1. Idea 1.-> "Individual investors may freely take exposure in the market(cash and derivatives) up to a computed exposure based on their disclosed income as per their Income Tax Return(ITR) over a period of time. "
I think this logic has many a flaw, as in India only a few people under tax bracket. Anyone can make disclosed income is just below the maximum limit to file a compulsory ITR return, say 2.5 lakh. So it is difficult to ban retailers from trading F&O completely. Also, it will be very difficult for RMS for brokers to maintain such individual limits.
In the same way, there will be a maximum limit for the higher income traders group too. How they can limit volumes to few successful pro traders!? Or there will be the different rule for them, like diff income tax slabs.
Anyway, this is very tough to implement, so SEBI has another idea, this is easy to implement and more dangerous.
2. Idea 2. ->
"Accordingly, existing criteria like market wide position limit and median quarter-sigma order size shall be revised upward from current level of INR 300 crore and INR 10 lakh respectively to INR 500 crore and INR 25 lakh respectively. An additional criterion, of average daily ‘deliverable’ value in the cash market of INR 10 Crore, has also been prescribed. "
This is more dangerous as "average daily ‘deliverable’ value in the cash market of INR 10 Crore" will remove many good traders friendly stocks from F&O section like DISH TV etc. SEBI indirectly trying to ban 'positional shorting' also in as many stocks as possible by limiting the F&O list also. Many F&O will fail to meed 10Crore criteria.
https://www.nseindia.com/products/content/equities/equities/eq_security.htm
---------
Another easy but really dangerous for retail traders is bigger lot size of 25lakh. With bigger lot size the chance of wipeout is faster without much experience or time spent in the market. Also, small capital swing traders will try to do intraday(cash) trading which will be more dangerous to them. Everyone know day trading is the most difficult way to make money bcoz of much more short-term noises (at least than few days positional swing trading). So why SEBI is forcing retail traders to trade in intraday cash (as delivery trading attached with much more STT)? Also, in absence of F&O intraday shorting in huge volumes in low liquid stocks can attract huge penalty(due to short delivery) to retail traders! Short delivery can attract huge loss in auction market including the penalty. I really doubt SEBI is really concerned about the risk exposure of retailers money?
If SEBI really wants to protect retailers, then the easiest way is to reduce lot size, this will provide more liquidity to the market too. But it seems the collection of more STT and shifting the volume in cash is the hidden agenda!
If not what else!
Share your views, traders........
This time SEBI is serious,
SEBI already reaches out to the exchanges and large brokerage houses for suggestions. So, don't take it lightly.