SEBI's new move to cut retailers participation in F&O!
- Thread starter headstrong007
- Start date
Already said previously(shared one youtube link), discussed on CNBC18, Zee business several times about Govt & SEBI's recent goal.
Govt want retailers must trade in options, not Future. SEBI is saying option trading(mainly buying) reduces the risk to retailers as they can't lose more money than invested. So option is best option for the retailer.
But, we traders know the truth very well. Options trading is far more riskier than futures trading, it's slow poising for most of the traders (except only a handful of good traders).
We can easily understand the hidden criteria of Govt why they want to shift most retailers from future to options. STT collection from option premium is actually far more than future(if we trade with similar capital). People trade with option more frequently with less money, with the illusion that they can't lose big in a single trade. But they lose more frequently, trade frequently => Govt collect more STT.
If someone trade future for positional trade with 1 lakh then only one lot. But with the option, it's 5-10-15 lots with same capital. Govt is getting more STT. Gormint recently increased STT in option 3 times, now want to shift retailers to options.
Options trading is hardest as to make the profit we require both DIRECTION & TIMING correct. And the TIMING part is the most difficult thing, it comes after mastering in trading. DIRECTION part is rather easy. Without TIMING one can make the profit in future with ONLY DIRECTION correct where is no such fast time decay. So, it is the simple case of stupidity for SEBI to force retailers towards more dangerous OPTION TRADING.
Govt want retailers must trade in options, not Future. SEBI is saying option trading(mainly buying) reduces the risk to retailers as they can't lose more money than invested. So option is best option for the retailer.
But, we traders know the truth very well. Options trading is far more riskier than futures trading, it's slow poising for most of the traders (except only a handful of good traders).
We can easily understand the hidden criteria of Govt why they want to shift most retailers from future to options. STT collection from option premium is actually far more than future(if we trade with similar capital). People trade with option more frequently with less money, with the illusion that they can't lose big in a single trade. But they lose more frequently, trade frequently => Govt collect more STT.
If someone trade future for positional trade with 1 lakh then only one lot. But with the option, it's 5-10-15 lots with same capital. Govt is getting more STT. Gormint recently increased STT in option 3 times, now want to shift retailers to options.
Options trading is hardest as to make the profit we require both DIRECTION & TIMING correct. And the TIMING part is the most difficult thing, it comes after mastering in trading. DIRECTION part is rather easy. Without TIMING one can make the profit in future with ONLY DIRECTION correct where is no such fast time decay. So, it is the simple case of stupidity for SEBI to force retailers towards more dangerous OPTION TRADING.
Now if they do it in MCX, from next day I will go to Petrol Pump to buy oil in CASH !! But bigger question is kahan jaun 'Tel Bechne' ? LoL
Jokes apart - interesting development indeed. Volume will suck big time. But I am wonderingn if SEBI recomended any matrix to link income (proof) to exposure? e.g if you earn 10 lakh PA, you can trade in 5 lot of BNF at a time or 50 lakh PA, you can trade 25 Lot? Or will it be left to broker discreation - that collect proof, and then upto brokerage house to decide how much leverage it will allow. If later is the case - whole excersize is BS !
I guess it is a work under progress (and will remain so). Planning to implementation of such filtering things and collaborating with all brokers - it is a nightmere for them as well. I can safely say there will be zillions of loophole if it is implemented in rush and retailers will exploit this happily.
And if you think all big brokerage house (the big one) are not already lobbying against it already - we will be grosely mistaken.
Jokes apart - interesting development indeed. Volume will suck big time. But I am wonderingn if SEBI recomended any matrix to link income (proof) to exposure? e.g if you earn 10 lakh PA, you can trade in 5 lot of BNF at a time or 50 lakh PA, you can trade 25 Lot? Or will it be left to broker discreation - that collect proof, and then upto brokerage house to decide how much leverage it will allow. If later is the case - whole excersize is BS !
I guess it is a work under progress (and will remain so). Planning to implementation of such filtering things and collaborating with all brokers - it is a nightmere for them as well. I can safely say there will be zillions of loophole if it is implemented in rush and retailers will exploit this happily.
And if you think all big brokerage house (the big one) are not already lobbying against it already - we will be grosely mistaken.
This happens only in India! I don't think anywhere in the world "product suitability" concept works for investors and traders. Why they don't apply same "product suitability" for Mutual Fund and delivery trades and ban every risky investment people made.
Mutual fund sahi hai, lekin trading karna galad hai!
People are losing big money in the stocks investment, property investments, mutual funds too. Why not SEBI/Gormint start making the individual portfolio according to " product suitability".
Mutual fund sahi hai, lekin trading karna galad hai!
People are losing big money in the stocks investment, property investments, mutual funds too. Why not SEBI/Gormint start making the individual portfolio according to " product suitability".
SEBI’s Opaque Decisions about Derivatives Settlement Market
https://www.moneylife.in/article/se...bout-derivatives-settlement-market/53791.html
SEBI wants to limit trading in derivatives to individuals on the basis of a sum computed on their disclosed income-tax returns. Intermediaries will be made to “undertake rigorous due diligence and take appropriate documentation from the investor.” An anonymous whistleblower, claiming to be an SMAC member, says that SEBI’s decisions are completely against the recommendations of SMAC, where most members, including the chairman, were of the view that the measures announced by SEBI would, in fact, ‘kill the derivatives market’ and, at the same time, not help improve the cash segment.
He says that Prof JR Varma, who chairs the committee, was not only against compulsory physical settlements, but “scathing of the proposed income-based exposure in the derivatives trading by the retail traders.” He further says, the SMAC was told that ‘over 95% of the public comments’ on the discussion paper were against the proposed measures. He points out that if SEBI ignores SMAC as well as public comments, why have the farce of conducting such an exercise at all?
https://www.moneylife.in/article/se...bout-derivatives-settlement-market/53791.html
SEBI wants to limit trading in derivatives to individuals on the basis of a sum computed on their disclosed income-tax returns. Intermediaries will be made to “undertake rigorous due diligence and take appropriate documentation from the investor.” An anonymous whistleblower, claiming to be an SMAC member, says that SEBI’s decisions are completely against the recommendations of SMAC, where most members, including the chairman, were of the view that the measures announced by SEBI would, in fact, ‘kill the derivatives market’ and, at the same time, not help improve the cash segment.
He says that Prof JR Varma, who chairs the committee, was not only against compulsory physical settlements, but “scathing of the proposed income-based exposure in the derivatives trading by the retail traders.” He further says, the SMAC was told that ‘over 95% of the public comments’ on the discussion paper were against the proposed measures. He points out that if SEBI ignores SMAC as well as public comments, why have the farce of conducting such an exercise at all?
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Tax Hungry Govt is behind all these dirty planings.
Govt want to move F&O traders to cash market as much as possible to collect extra STT.
Govt directed SEBI to make physical settlement compulsory in the phased manner as THERE IS VERY HIGH STT @DELIVERY TRADES trade than F&O. Govt just want to loot investors.
Govt also want to shift retailers from future to options(not writing but buying) so that premium trading generates comparatively more volumes than Future.
SEBI already increased the positional margin for future and option writing. Now span+exposure both needed. Now SEBI is thinking ITR linking to cut further participation in Future and move future volumes to the options market. Tax-hungry Govt already increased Option STT 3 times, now want to shift volumes there.
But, how SEBI can consider only current income(ITR linking) only? They should consider a traders multi-year accumulated income on their lifetime? And total net worth too.
Let's see how development goes. I am expecting a lot of protest from high net-worth influential traders and brokerage houses too. SEBI needs to be dragged into the Supreme Courts. It's something against the fundamental right to do the business in the stock market. It's the pure market manipulation by denying the entry to a large group of small retailers in the name of 'product suitability'.
Govt want to move F&O traders to cash market as much as possible to collect extra STT.
Govt directed SEBI to make physical settlement compulsory in the phased manner as THERE IS VERY HIGH STT @DELIVERY TRADES trade than F&O. Govt just want to loot investors.
Govt also want to shift retailers from future to options(not writing but buying) so that premium trading generates comparatively more volumes than Future.
SEBI already increased the positional margin for future and option writing. Now span+exposure both needed. Now SEBI is thinking ITR linking to cut further participation in Future and move future volumes to the options market. Tax-hungry Govt already increased Option STT 3 times, now want to shift volumes there.
But, how SEBI can consider only current income(ITR linking) only? They should consider a traders multi-year accumulated income on their lifetime? And total net worth too.
Let's see how development goes. I am expecting a lot of protest from high net-worth influential traders and brokerage houses too. SEBI needs to be dragged into the Supreme Courts. It's something against the fundamental right to do the business in the stock market. It's the pure market manipulation by denying the entry to a large group of small retailers in the name of 'product suitability'.
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sebi will fail miserably like it has always been.
You cann;t limit ppls ...
every thing has loop hole make it 10 lakhs per lot in futures then player will take loan leverage and still play
It;s like increase Cigar price thinking ppls will stop buying well consumer of cigar doesn;t care wats the price u don;t believe me look at
profit of tobacco companies
SEBi = FAil
and yes we still are paying STT that chidu said will remove after few years and never removed lol LEECHER
You cann;t limit ppls ...
every thing has loop hole make it 10 lakhs per lot in futures then player will take loan leverage and still play
It;s like increase Cigar price thinking ppls will stop buying well consumer of cigar doesn;t care wats the price u don;t believe me look at
profit of tobacco companies
SEBi = FAil
and yes we still are paying STT that chidu said will remove after few years and never removed lol LEECHER
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