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

[Smart_trade]

It is deeply frustrating that the babus can knock us down and we can not even put up a fight.

For fighting with Govt, you need a large and united vote bank, nuisance value,political clout and public support...we traders and stock market participants have none of these.....so we are not considered important by anyone. We can never be united also...in 1992 stock brokers and traders planned a nationwide strike to protest against SEBI tax imposed.....the strike did not last even for 2 hours and when it came to money, all brokers one by one started their shops ( initially saying that their FII clientale will be unhappy and then strike failed....transport operators can hold Govt to ransom
and get their demands met but stock market participants can never come united...here everyone is a wise man.

Not even a meak protest happened when LTCG tax was introduced and STT not abolised in return....

Smart_trade

 

[timepass]

For fighting with Govt, you need a large and united vote bank, nuisance value,political clout and public support...we traders and stock market participants have none of these.....so we are not considered important by anyone. We can never be united also...in 1992 stock brokers and traders planned a nationwide strike to protest against SEBI tax imposed.....the strike did not last even for 2 hours and when it came to money, all brokers one by one started their shops ( initially saying that their FII clientale will be unhappy and then strike failed....transport operators can hold Govt to ransom
and get their demands met but stock market participants can never come united...here everyone is a wise man.

Not even a meak protest happened when LTCG tax was introduced and STT not abolised in return....

Smart_trade

The industry has grown since then, and the government earns significant revenue from the market.

True, the users are scattered all over because it is an internet business, but some protest must be undertaken, even if online, to show the numbers.

A major point is that it may encourage dabba trading.

 

[madhusudhan_r02]

My take is SEBI knows everything, they have access to all market/investors data.

They also know 90-95% are small traders trading with F&O. They just want to shift the F&O volume to CASH market as much as possible to collect some extra STT for Govt.
SEBI would not be benefited by that move, as their charges are same only Rs 15/Cr for all segments, Intraday cash or delivery or F&O all same. It's the only Govt who would get extra STT.

There is clear proof that Gormint is behind the ugly plan to collect some more TAX.

1. Same Gormint increased the service tax rate from 12.36% to 14% and then imposed Swachh Bharat Cess of 0.5% and Krishi Kalyan Cess of 0.5%. Finally, Service Tax is 18% with GST!
2. Gormint saw traders are shifting to option trading, most recently STT for selling options has been revised from 0.017% to 0.05% on the premium which is 300% of previous one!!
3. Then, most infamous 10% LTCG was introduced but STT is not abolished. This is called dual taxation.

Finally, the ugliest plan started to move F&O volumes to CASH market(to collect some extra STT) using SEBI in the name of Investors Protection!!!!

I think the argument of SEBI/govt wanting to move traders from F&O to Cash market may not be true with the recent decision.

As per SEBI's point, they want to limit exposure in both cash/derivatives market -

"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."

 

[timepass]

Why does SEBI need to take documentation from the investor ?? They have all the details like PAN and Aadhar. They can very well extract the details themselves and set market-wide limitations if they so wish.

They are only increasing the red-tape to avoid pro-active monitoring from their side and push the onus onto the broker / trader.

Anyway, it only sounds unbelievable to me. I don't think they will go through fully with it. Maybe just make it compulsory for the traders to file returns or something.

 

[vikas2131]

Why does SEBI need to take documentation from the investor ?? They have all the details like PAN and Aadhar. They can very well extract the details themselves and set market-wide limitations if they so wish.

They are only increasing the red-tape to avoid pro-active monitoring from their side and push the onus onto the broker / trader.

Anyway, it only sounds unbelievable to me. I don't think they will go through fully with it. Maybe just make it compulsory for the traders to file returns or something.

Somehow i doubt they will succeed in it..

 

[timepass]

Somehow i doubt they will succeed in it..

Nothing wrong with it. I think that it is desirable. Maybe if they themselves link up with the IT department, it would be possible.

 

[Tejas Khoday]

For fighting with Govt, you need a large and united vote bank, nuisance value,political clout and public support...we traders and stock market participants have none of these.....so we are not considered important by anyone. We can never be united also...in 1992 stock brokers and traders planned a nationwide strike to protest against SEBI tax imposed.....the strike did not last even for 2 hours and when it came to money, all brokers one by one started their shops ( initially saying that their FII clientale will be unhappy and then strike failed....transport operators can hold Govt to ransom
and get their demands met but stock market participants can never come united...here everyone is a wise man.

Not even a meak protest happened when LTCG tax was introduced and STT not abolised in return....

Smart_trade

Agree 100%.

 

[headstrong007]

I think the argument of SEBI/govt wanting to move traders from F&O to Cash market may not be true with the recent decision.

As per SEBI's point, they want to limit exposure in both cash/derivatives market -

"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."

Just, think it logically. In cash market, u can trade with only one stock also, there is no minimum lot size like 1000-2000-5000 etc. So there is no such extreme bad effect of limiting exposure in cash market, u can cut your trading volume easily according to the limitation of exposure.
It's Future market where u need minimum margin which is already high for small investors. Anyone can trade cash market with 5-10 stocks. But u can't trade with Future below 1 lot, u can't trade F&O with 1/2, 1/4, 1/8 lot if SEBI limit exposure. . So it's small F&O traders who would force to shift to the cash market.

 

[Novice30]

I think the argument of SEBI/govt wanting to move traders from F&O to Cash market may not be true with the recent decision.

As per SEBI's point, they want to limit exposure in both cash/derivatives market -

"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."

Its an attempt to force small retail towards mutual funds.

Seems like a govt. - MF nexus.

 

[Tejas Khoday]

SEBI has been pondering over this for quite some time. I don't know why exactly but If you want to know what their concerns really are, they are given in detail in their discussion paper in July 2017. They have mentioned several facts and points for discussion which were then presumably evaluated within their circles.