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

[headstrong007]

So Bank Nifty positional option writers also need approx 20,000-23,000 (2% ) extra from NOV 30 which is almost one-third increase!
Bank Nifty is already increasing day by day and margin requirement is increasing rapidly in a proportionate way day by day! Now there is an additional 2% margin! Every F&O treaders exposure would be already limited from Nov 30! What is the need of further net-worth & ITR linking to cut exposure? This measure will already cut the liquidity by 25%-30% at least.

 

[Novice30]

So Bank Nifty positional option writers also need approx 20,000-23,000 (2% ) extra from NOV 30 which is almost one-third increase!

Implementation begins from September 14th and will be increased gradually till Nov 30th.

Only option buyers are safe.

 

[Novice30]

https://www.nseindia.com/content/circulars/CMPT38768.pdf

Point no. 5 says even more margins may be imposed (over the ASM) if deemed necessary....lol

 

[Smart_trade]

SEBI probably wants to implement these restrictions as early as possible.It has taken up product suitability discussions in its 14 Sept board meeting and it probably anticipates stiff resistance to net worth etc and they have taken a early start by increasing margins which no investor body can challenge in any court as Stock Exchanges are within their rights to impose any margins and there cannot be any appeal against the same.So in case the net worth rules get delayed by getting challenged in courts,they have already achieved part of their goal of reducing the leverage by increasing the margins ....clever move by SEBI.As they have mentioned these margins can go up if the need be.Effect of This margins increase on stock futures and options will be big and it will drive stock derivatives out of reach of traders.

A trader trading 10 BNF contracts now will be able to trade 6 with the same margin....If net worth and profit restrictions sail through smoothly then this margin may be withdrawn.If restrictions and extra margins both stay in the market then liquidity will suffer big time.

Smart_trade

 

[monkeybusiness]

Hmmm, somebody needs to remind them of this story, in case this buffoons went to school.
http://www.preservearticles.com/201...-laid-golden-eggs-moral-greed-is-a-curse.html

 

[Satya.]

So Bank Nifty positional option writers also need approx 20,000-23,000 (2% ) extra from NOV 30 which is almost one-third increase!
Bank Nifty is already increasing day by day and margin requirement is increasing rapidly in a proportionate way day by day! Now there is an additional 2% margin! Every F&O treaders exposure would be already limited from Nov 30! What is the need of further net-worth & ITR linking to cut exposure? This measure will already cut the liquidity by 25%-30% at least.

capitalised trdr has no prob by dis
instead of 10 lots,u'd trd 6 lots as per ST Da's post,so many will remain in dis profession

hw it'll effect eq cash market? no news on restiction for day trdrs in cash mrkt yet

 

[hitesh05]

capitalised trdr has no prob by dis
instead of 10 lots,u'd trd 6 lots as per ST Da's post,so many will remain in dis profession

hw it'll effect eq cash market? no news on restiction for day trdrs in cash mrkt yet

The margin will be same for intraday F/O also? Or mis order can take as usual?

 

[XRAY27]

SEBI probably wants to implement these restrictions as early as possible.It has taken up product suitability discussions in its 14 Sept board meeting and it probably anticipates stiff resistance to net worth etc and they have taken a early start by increasing margins which no investor body can challenge in any court as Stock Exchanges are within their rights to impose any margins and there cannot be any appeal against the same.So in case the net worth rules get delayed by getting challenged in courts,they have already achieved part of their goal of reducing the leverage by increasing the margins ....clever move by SEBI.As they have mentioned these margins can go up if the need be.Effect of This margins increase on stock futures and options will be big and it will drive stock derivatives out of reach of traders.

A trader trading 10 BNF contracts now will be able to trade 6 with the same margin....If net worth and profit restrictions sail through smoothly then this margin may be withdrawn.If restrictions and extra margins both stay in the market then liquidity will suffer big time.

Smart_trade

Hmm !!! Trading is tough in this case,spread may increase..turnover will drop !!! we will see lot more traders opening training schools

 

[Smart_trade]

Hmm !!! Trading is tough in this case,spread may increase..turnover will drop !!! we will see lot more traders opening training schools

After SEBI comes out with restrictions, we will feel that they are not too harsh ,we were worrying unnecessarily.....

Smart_trade

 

[headstrong007]

capitalised trdr has no prob by dis
instead of 10 lots,u'd trd 6 lots as per ST Da's post,so many will remain in dis profession

hw it'll effect eq cash market? no news on restiction for day trdrs in cash mrkt yet

5% increase of margin in Stock F&O is BIG, when the overall margin is 12.5% [RELIANCE] only. It is then 17.5%. It's 40% increase. It will hurt capitalized traders too as the rule is the same for all.
No one will challenge the rule, as the rule is the same for all.

SEBI is just damaging the market structure. Higher margin only possible if the lot size is decreased at the same time.

Liquidity in Stock F&O will hit heavily, already not all stock F&O are liquid enough. Without enough liquidity and 30-40% decrease in volume it is not that simple case that instead of 10 lots , u'd trade 6 lots.
Impact cost will be much higher due to 30-40% less volume. Profit from trading will be much lesser due to less volume traded with the same margin. This will affect the trading pattern of the positional traders, they will try to use options to compensate.
The market will lose some momentum with 30%-40% F&O volume. On the other hand, some future volume will automatically shift to options(only buy side) due to high margin requirement. This will create a sudden high volatility spike - Nontradable movement.
SEBI is making the market inefficient.
Beginners and small retail traders will lose money more easily in Stock F&O than before bcoz less liquid script is dangerous to trade. Also, a less volume script is easy to manipulate. Pretty immature action from SEBI!