SEBI's new move to cut retailers participation in F&O!
- Thread starter headstrong007
- Start date
Head strong bhai,
I am here by quoting verbatim from pdf on SEBI website ...
"3. Rationalizing and Strengthening the framework of Equity Derivatives Market SEBI Board took note of discussion papers titled ‘Growth and Development of Equity Derivatives Market in India’ and ‘Physical settlement in stock derivatives’, public comments received thereon and also recommendations of the Secondary Market Advisory Committee (SMAC). Proposals approved by the Board to rationalize and strengthen the framework of the equity derivatives market, inter-alia, include the following: I. To facilitate greater alignment of the cash and derivative market, physical settlement for all stock derivatives shall be carried out in a phased and calibrated manner.
Page 4 of 8
II. To update and strengthen the existing entry criteria for introduction of stocks
into the derivative segment in line with the increase in market capitalization
since the last revision of the criteria in 2012. 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. The enhanced criteria are to be met for a
continuous period of six months.
III. To begin with, stocks which are currently in derivatives but fail to meet any of
the enhanced criteria, would be physically settled. Such stocks would exit the
derivative segment if they fail to meet any of the enhanced criteria within a
period of one year from the specified date or fail to meet any of the current
existing criteria for a continuous period of three months.
IV. Stocks which are currently in derivatives and meet the enhanced criteria shall
be cash settled. Such stocks if they fail to meet any one of the enhanced
criteria for a continuous period of three months shall move from cash
settlement to physical settlement. After moving to physical settlement if such
stock does not meet any of the current existing criteria for a continuous period
of three months, then it would exit out of derivatives. After a period of one
year from the specified date, only those stocks which meet the enhanced
criteria would remain in derivatives.
V. To reflect global initiatives on product suitability, a framework has been
approved. Individual investors may freely take exposure in the market (cash
and derivatives) upto a computed exposure based on their disclosed income
as per their Income Tax Return(ITR) over a period of time. For exposure
beyond the computed exposure, the intermediary would be required to
undertake rigorous due diligence and take appropriate documentation from
the investor".
You can also visit the following link and see the pdf under press release "SEBI board meeting"...
https://www.sebi.gov.in/sebiweb/home/HomeAction.do?doListing=yes&sid=6&ssid=23&smid=0
From your posts i can see how worried you are. Please don't worry and don't panic. The way they are trying to regulate F&O participation is no doubt not a right way. But we have to abide by regulation and find a way out of this and find positive things in the latest regulation.
First let us see what can we do to find a way out of this and could trade even after the regulation is in place...
1. This regulation intends to set exposure limits on each individual client...depending upon the income declared in their respective ITR's...So people who are filing returns need not worry...But people who are not filing returns can file past 3 years returns up to 2.5 lakh income per annum(with no tax to be paid) or with more income if intends to pay income tax along with fine for the past three years by engaging a tax consultant who will charge you at most 3 to 5K...So you will get minimum limit by the time regulation is in place.
And second thing is you can increase your exposure limit by giving additional documentation to broker as is mentioned in the pdf under part 3(V) where in i italicized and underlined the lines...So it says you can have additional exposure on the back of some documentation and collateral like post dated cheque,DD or some thing like that( i am assuming this collateral thing.i may be wrong here.)
Do you think the brokerage(the intermediary to collect additional documentation) industry will keep quiet if turnovers dwindle, they will find out someway out to provide leverage otherwise they cannot survive without retail business.
2. I think you are mistaken about idea2. Actually in my opinion they are not speaking about Fut lot size increase but the cash market criteria to include a particular stock in F&O, wrt median quarter sigma order size and deliverable quantity stock value. I think they are good regulation and actually reduce scope for manipulation....and a boon to retail trader.
So the lot size will be the same...no need to worry about the lot size. And i know even if Dish TV is excluded HS 007 will find and successfully trade some other instrument with better volatility....By the way HS bhai, average deliverable stock value of Dish tv for the past one year is around 14.72 crores...So it can not be excluded from F&O on that criteria....
All the Very Best,
Be cheerful,
Happy trading...
I am here by quoting verbatim from pdf on SEBI website ...
"3. Rationalizing and Strengthening the framework of Equity Derivatives Market SEBI Board took note of discussion papers titled ‘Growth and Development of Equity Derivatives Market in India’ and ‘Physical settlement in stock derivatives’, public comments received thereon and also recommendations of the Secondary Market Advisory Committee (SMAC). Proposals approved by the Board to rationalize and strengthen the framework of the equity derivatives market, inter-alia, include the following: I. To facilitate greater alignment of the cash and derivative market, physical settlement for all stock derivatives shall be carried out in a phased and calibrated manner.
Page 4 of 8
II. To update and strengthen the existing entry criteria for introduction of stocks
into the derivative segment in line with the increase in market capitalization
since the last revision of the criteria in 2012. 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. The enhanced criteria are to be met for a
continuous period of six months.
III. To begin with, stocks which are currently in derivatives but fail to meet any of
the enhanced criteria, would be physically settled. Such stocks would exit the
derivative segment if they fail to meet any of the enhanced criteria within a
period of one year from the specified date or fail to meet any of the current
existing criteria for a continuous period of three months.
IV. Stocks which are currently in derivatives and meet the enhanced criteria shall
be cash settled. Such stocks if they fail to meet any one of the enhanced
criteria for a continuous period of three months shall move from cash
settlement to physical settlement. After moving to physical settlement if such
stock does not meet any of the current existing criteria for a continuous period
of three months, then it would exit out of derivatives. After a period of one
year from the specified date, only those stocks which meet the enhanced
criteria would remain in derivatives.
V. To reflect global initiatives on product suitability, a framework has been
approved. Individual investors may freely take exposure in the market (cash
and derivatives) upto a computed exposure based on their disclosed income
as per their Income Tax Return(ITR) over a period of time. For exposure
beyond the computed exposure, the intermediary would be required to
undertake rigorous due diligence and take appropriate documentation from
the investor".
You can also visit the following link and see the pdf under press release "SEBI board meeting"...
https://www.sebi.gov.in/sebiweb/home/HomeAction.do?doListing=yes&sid=6&ssid=23&smid=0
From your posts i can see how worried you are. Please don't worry and don't panic. The way they are trying to regulate F&O participation is no doubt not a right way. But we have to abide by regulation and find a way out of this and find positive things in the latest regulation.
First let us see what can we do to find a way out of this and could trade even after the regulation is in place...
1. This regulation intends to set exposure limits on each individual client...depending upon the income declared in their respective ITR's...So people who are filing returns need not worry...But people who are not filing returns can file past 3 years returns up to 2.5 lakh income per annum(with no tax to be paid) or with more income if intends to pay income tax along with fine for the past three years by engaging a tax consultant who will charge you at most 3 to 5K...So you will get minimum limit by the time regulation is in place.
And second thing is you can increase your exposure limit by giving additional documentation to broker as is mentioned in the pdf under part 3(V) where in i italicized and underlined the lines...So it says you can have additional exposure on the back of some documentation and collateral like post dated cheque,DD or some thing like that( i am assuming this collateral thing.i may be wrong here.)
Do you think the brokerage(the intermediary to collect additional documentation) industry will keep quiet if turnovers dwindle, they will find out someway out to provide leverage otherwise they cannot survive without retail business.
2. I think you are mistaken about idea2. Actually in my opinion they are not speaking about Fut lot size increase but the cash market criteria to include a particular stock in F&O, wrt median quarter sigma order size and deliverable quantity stock value. I think they are good regulation and actually reduce scope for manipulation....and a boon to retail trader.
So the lot size will be the same...no need to worry about the lot size. And i know even if Dish TV is excluded HS 007 will find and successfully trade some other instrument with better volatility....By the way HS bhai, average deliverable stock value of Dish tv for the past one year is around 14.72 crores...So it can not be excluded from F&O on that criteria....
All the Very Best,
Be cheerful,
Happy trading...
Just-Trade
This is a very good idea and I think someone will do it soon.
Best place is
https://www.change.org/
I expect some discount brokers with very good client base will do it soon.
Best place is
https://www.change.org/
I expect some discount brokers with very good client base will do it soon.
I request Headstrong007 to take initiative,
1. he has very good drafting skills,
2. In depth knowledge of markets & current situation
3. Has extremely good reasoning to further the cause.
On our part we will forward the link to every contact available on our mailing list and request them to sign the petition.
1. he has very good drafting skills,
2. In depth knowledge of markets & current situation
3. Has extremely good reasoning to further the cause.
On our part we will forward the link to every contact available on our mailing list and request them to sign the petition.
HS007 bhai,
Downloaded data from the NSE website from the link below and applied excel formula to calculate delivery value by multiplying deliverable quantity with closing price...Tried to attach the sheet but seems csv is not valid extension here, so not able to attach the sheet....
https://www.nseindia.com/products/content/equities/equities/eq_security.htm
Hope this helps
Downloaded data from the NSE website from the link below and applied excel formula to calculate delivery value by multiplying deliverable quantity with closing price...Tried to attach the sheet but seems csv is not valid extension here, so not able to attach the sheet....
https://www.nseindia.com/products/content/equities/equities/eq_security.htm
Hope this helps
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