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

[Smart_trade]

Dada,that means sebi will only higher the margin for futures and options so that small traders wont be able to enter it.Just like they increased contract from 2L to 5L.now they will raise it to 15L.

But Equity cash market intraday speculation will be there always.May be 5X leverage will be provided?

I really do not know what rules SEBI comes out with but they will not kill the market liquidity...they will reduce excessive speculation, multiple trading accounts etc but genuine trader and investor has nothing to fear...but people aspiring to get rich quickly by large leverage trading will have to show the required netwoth and past experience.

Smart_trade

 

[headstrong007]

Wrong logic....mutual funds are not allowed to trade in derivative instruments .
Smart_trade

It's not only mutual funds but SEBI is doing a favor for FII and FPI also, by cutting the retailers participation in F&O.

Mutual funds are trading indirectly in the name of hedging.
You can easily understand the logic if you think about it deeply.
As mutual funds are already sitting on cash-based delivery positions. They can easily short the market(individual stock futures) using derivative in the name of hedging. Then book profit later. They are doing so multiple times but just can't use high leverage like the retailers are using in F&O. That was my point that all mutual funds, FII, FII etc are probably jealous about the extra leverage small retailers are using.
The new generation traders are smart and internet savvy, they are using various tech tools. Nowadays the number of small retail educated traders making a profit consistently is increasing day by day. Biggies are not happy with that some small traders are using the advantage of leverages very well.


But due to high lot size already small retail investors can't properly hedge their delivery based stock positon.
SEBI must decrease lot size if really worried about small retail investors.

F&O market is for hedging. Small retail investors need to hedge their small positions too.

Mutual funds are getting permission to get access to commodity market too. Soon they will start f&o trading using indirect ways, biggies always know how to find loopholes very well.

 

[headstrong007]

Your point about stopping NSE pathsala is valid...many new traders used it for learning stock markets and also for paper trading.....so I was also surprised when it was discontinues. It is NSE's decision and we dont know why it was stopped when SEBI and Stock Exchanges are encouraging investor education initiatives and spending lots of money on it.

Smart_trade

Stock Exchanges are encouraging investor education and stopping popular demo trading platform and free detailed charts like below!
Something fishy! Is not it?

*********
You must remember, NSE stopped free nice & accurate detailed intraday charts also. Lots of traders were using it.
FREE Charts like below, which was helping lots of traders EOD analysis, are history now! Present charts are not much useful comparing to the previous one. Why they stopped it?

Small Traders without data feed facility/software was using such detailed charts to analyze the market EOD, suddenly NSE stopped it. An old example of such free nice charts(still available with internet) with seconds of accurate data!

 

[Vitthala]

@headstrong007
any relation of Sebi move with Google Finance providing data?it also stopped giving data..
they changed the url

 

[Smart_trade]

I see that many members are going on a war path with SEBI,Govt etc.....it wont help . Our best case is convince them, make representations and make them dilute the harsh measures.....see understand one thing that we traders have no respect in the society....society considers us a " satodiyas " and even they mistakenly think that we use foul means to make money....this us totally false but that is the public perception.....

We ourselves are to be blamed for that ......traders have low self respect. Prime Minister has said that Caital Market participants need to contribute more by way of taxes to nation building. How many traders pay their taxes correctly or even file the IT returns ? By going by the questions in our own IT threads one gets an idea that our performance on this count is poor......

I am a trader and investor so I am not from a different planet . I have more than 60 % of my networth in stocks and mutual funds. I did not have luxury of rich and affluent upbringing. But I dont think fighting will help. If tomorrow SEBI says you have to have a networth of Rs 20 L to trade in derivatives, no one will come to our rescue....politicians and opposition parties wont take our cause because for miniscule vote bank they wont risk themselves seen as supporting capatalist and speculators in common man's view......Courts normally do not interfere with SEBI decision to reduce speculation and other regulatory matters...the fundamental rights arguments will not stand even for 10 min in the Courts.Courts are unlikely to say no need for safeguards...go for unchecked speculation.....

So I feel that days of excessive leverage are definately over and we have to reconcile with it.....no matter how much we criticise SEBI,Exchanges,Govt,ruling party etc but will it help ?? I think it will spoil our case if anything and more harsh measures will come .....

So let us see what rules they decide...we can make representations on those rules to make them softer which SEBI may consider and agree to bring the regulations step by step allowing sufficient time for market participants to avoid any knee jerk reaction and making sure that the participants get adjusted to the regulations......that is the best course of action in present circumstances.

Smart_trade

 

[headstrong007]

@headstrong007
any relation of Sebi move with Google Finance providing data?it also stopped giving data..
they changed the url

It's not about SEBI but probably related with NSE. But this time I don't have enough proof.

After the fight with SGX, NSE applied various restriction on sharing their data, maybe google faced some difficulty (I am not sure, what happened behind the scene. Maybe the cost increases for LIVE CHARTS so much that Google doesn't think it's anymore profitable).

 

[Smart_trade]

My very rough guess is that SEBI will restrict the exposure in derivatives to the extent of 200 -300 % of Liquid networth ( excluding land,buildings )...so if one has a Rs 5 L networth, he can take a position of 1-2 contracts in F & O. Just a guess....if the networth is only Rs 50,000 then trade upto Rs 1.5 L in cash markets. SEBI is unlikely to do anything to kill the market liquidity as they have very recently given permission to the exchanges to remain open till 11:55 in the night.....so going by that it is unlikely that severe strict measures are introduced.

ST

 

[afin]

My very rough guess is that SEBI will restrict the exposure in derivatives to the extent of 200 -300 % of Liquid networth ( excluding land,buildings )...so if one has a Rs 5 L networth, he can take a position of 1-2 contracts in F & O. Just a guess....

ST

sir, do you think the contract sizes would also increase?>

 

[Smart_trade]

sir, do you think the contract sizes would also increase?>

No ,if they bring networth restrictions, they wont increase contract size...they may even reduce or introduce mini contracts so in 10 L-15 L exposure one can trade 3-4 mini contracts.

Increasing the contract size will kill the market...SEBI and Stock Exchanges understand this.

Smart_trade

 

[cinderblock]

I think Sebi's already mentioned restricting exposure to 50% of networth - depending on the definition of networth.

So a 1 cr liquid networth will mean only 5 lots

Anyway let's see what happens. Many a slip between the cup and the lip