SEBI's new move to cut retailers participation in F&O!

[headstrong007]

SEBI is after AMCs to decrease their charges as the volumes have increased and the benefits of economies of scale must be shared with the investors....SEBI will make them reduce the charges benefitting the investors of mutual funds.As it is charges in direct funds are much less than regular funds and investors can opt for direct .

Smart_trade

According to economictimes report,

Expenses eat into the returns on equity and debt mutual funds to the extent of a fifth or a sixth. Sebi wants to lower the fee the funds charge investors. Excessive regulation is a bad idea, and will stifle the MF industry.

This happened in August 2009 when Sebi scrapped entry loads to stop the practice of brokers getting investors to take money out of well-performing existing schemes and subscribe to new fund offers to pocket the entry load. Without a specific incentive for brokers to rope in subscribers to MFs, inflows tanked. Sebi then had to allow such incentives, by merging them into overall expenses. MFs are free to compete with lower fees, subject to a cap already in place.


https://blogs.economictimes.indiatimes.com/et-editorials/too-much-worry-is-a-bad-thing-sebi/

 

[Smart_trade]

Ultimately the cash will shift from equity and mutual funds to Fixed Deposit Account! That may help NPA troubled Banks. That may be hidden criteria of Gormint, who knows!

But, by doing that, we are going back to the primitive age before 1875.
The Traders group eventually moved to Dalal Street in 1874 and became an official organization known as "The Native Share & Stock Brokers Association" in 1875.

I dont think person who has been investing in the markets by way of shares or mutual funds investments will enter fixed deposits because fixed deposits rate of return is low and they are tax inefficient....but equity traders due to exposure issues entering mutual funds cannot be ruled out.....but I am sure traders will find a way out by way of CA networth certificate etc and will keep trading but on low exposure in my view.

Smart_trade

 

[Pradeep Narayan]

What if we trade in a world of no leverage. What can the possible fallout be:
a. Turnover at NSE will first take a major beating, BSE and MSE may become more attractive.
b. Brokerages will be flushed with cash... so how does SEBI protect the investor when a brokerage house collapses?
c. Small trader will get small profits... and small losses. This will make trading as a career less interesting and lots will look for jobs... voila job creation will happen
d. Arbitrageurs will find opportunities.

Can't think of anything more.

 

[headstrong007]

I dont think person who has been investing in the markets by way of shares or mutual funds investments will enter fixed deposits because fixed deposits rate of return is low and they are tax inefficient....but equity traders due to exposure issues entering mutual funds cannot be ruled out.....but I am sure traders will find a way out by way of CA networth certificate etc and will keep trading but on low exposure in my view.

Smart_trade

Currently, most of the small retail traders are trading actively with under 50 thousands (mostly under 1 Lakh capital) to test the water. Most of them will not spend such an extra burden of the cost of acquiring a networth certificate from CA.
They will quit silently. Similarly, most of the small investors under the 2.5 lakh exemption never file any ITR. Many of them will not take such a headache when their investment amount is about 20,000-50000.

I saw in CNBC small retailers are calling for advice for a small position about 2-3 thousands only, many said they want to invest first time with 10,000-15,000. They want to make it directly with their own intelligence, not through mutual funds.
Those are mostly younger generation with small income group, they have the dream in their eyes that they can easily beat the mutual funds return. Some of them are gaining higher return than mutual funds, what about them?
Due to the anger, they will dump their mutual funds too and put their money into FD. Let's see the effect.

The South Korean market is the live example of what happened after such regulations. All small retail investors lost interest in the market and dumped their mutual funds too. The market was dead for the next 4 years until most of the regulations are withdrawn. I am expecting the similar consequences here.

 

[bpr]

According to that report,

Many retail investors may not want to undergo the hassle of obtaining a net worth certificate.

Many may also be reluctant to reveal their net worth to Sebi. Hence, the imposition of restrictions may propel more retail investors to invest through mutual funds.

**************

So that is the Gormint's idea! I am telling it all from the start!

Mutual funds will die without liquidity. The impact cost will increase too for FII-FPI heavily.
The market will lose momentum without volume. No one wants to invest in a dead market. RIP mutual funds.

telling to sebi is not issue ...but what abt broker leaks ..
here you open one trading account next day you have 10 sms trading calls
how safe is your info at the broker ...
Some times they even suggest qty to buy may be they know your balance as well.
Now after this tv/fridge/car salesman will call

 

[afin]

I am thinking that leverage of 4 to 1 on intraday cash accounts would be provided, on the lines of what's happening in the USA.

I don't think that leverage will be gone completely. It might be the case that the CO/ BO thing and excessive leverages on futures trade would be greatly restricted.

 

[TraderGYO]

What if we trade in a world of no leverage. What can the possible fallout be:
a. Turnover at NSE will first take a major beating, BSE and MSE may become more attractive.
b. Brokerages will be flushed with cash... so how does SEBI protect the investor when a brokerage house collapses?
c. Small trader will get small profits... and small losses. This will make trading as a career less interesting and lots will look for jobs... voila job creation will happen
d. Arbitrageurs will find opportunities.

Can't think of anything more.

job creation does not happen by kicking out people from exiting jobs.

 

[sumosanammain]

Thousands of people will loose jobs at brokerages, as brokerages wont be able to afford current staff levels with a drastic drop in volumes.

 

[Satya.]

Currently, most of the small retail traders are trading actively with under 50 thousands (mostly under 1 Lakh capital) to test the water. Most of them will not spend such an extra burden of the cost of acquiring a networth certificate from CA.
They will quit silently. Similarly, most of the small investors under the 2.5 lakh exemption never file any ITR. Many of them will not take such a headache when their investment amount is about 20,000-50000.

I saw in CNBC small retailers are calling for advice for a small position about 2-3 thousands only, many said they want to invest first time with 10,000-15,000. They want to make it directly with their own intelligence, not through mutual funds.
Those are mostly younger generation with small income group, they have the dream in their eyes that they can easily beat the mutual funds return. Some of them are gaining higher return than mutual funds, what about them?
Due to the anger, they will dump their mutual funds too and put their money into FD. Let's see the effect.

The South Korean market is the live example of what happened after such regulations. All small retail investors lost interest in the market and dumped their mutual funds too. The market was dead for the next 4 years until most of the regulations are withdrawn. I am expecting the similar consequences here.

I'll quit sirji
w/o leverage trdrs lyk me wont survive.
What next-I'll do some unorganised work and will never pay any income tax.I will never put my money in bank.
This is how educated people turn in to a criminal bcuz this so called beurocrates sitting in AC room decide that 39rs per day kamane wala insaan rich hai..so be it Cong or BJ party..dono ek hi hai

Hope now BJ modi supporter are happy by SEBI move.

 

[Satya.]

I'll quit sirji
w/o leverage trdrs lyk me wont survive.
What next-I'll do some unorganised work and will never pay any income tax.I will never put my money in bank.
This is how educated people turn in to a criminal

Hope modi supporter are happy by SEBI move.