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

[timepass]

Why do you think so?

Right.. I checked. The breakeven is slightly lower !!! The cost of trade is higher, but the breakeven is lower.

If BNF lot size was increased to 100, then the breakeven (stamp duty apart) is 4.33 points, while with lot size 40, the breakeven is 5.03 !!

There is a big difference in cost of trade.

 

[headstrong007]

https://www.sebi.gov.in/legal/circu...-for-stocks-in-derivatives-segment_38629.html

SEBI NEW FRAMEWORK NOT GOOD!!
Many low liquid stocks will force to left out from F&O list soon to fulfill SEBI's new directives!!
For derivative traders trading with such stocks have no option but shifting to Cash Market.

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Note: median quarter sigma order size 25lakh is not min lot size, that was a different infamous proposal, still under the table of SEBI!
https://www.thehindubusinessline.com/iw/2003/08/31/stories/2003083100031300.htm

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Many stocks can't fulfill new framework!

1. The market-wide position limit in the stock shall not be less than ₹ 500 crore [previously it was 300 Cr]
2. The stock’s median quarter sigma order size over the last six months, on a rolling basis, shall not be less than ₹ 25 Lakh [Previously it was 10 lakh
3. The average daily delivery value in the cash market shall not be less than ₹ 10 crore in the previous six months on a rolling basis.
4. The stock shall be chosen from amongst the top 500 stocks in terms of average daily market capitalization and average daily traded value in the previous six months on a rolling basis.

We can download monthly quarter sigma and market wide position limit from below,
https://www.nseindia.com/products/content/derivatives/equities/selection_criteria.htm

As far as last month data, I have listed the stocks which not fulfill above FIRST TWO criteria. Maybe out soon, first punishment is a physical settlement for them then OUT from F&O after 6 months.
I see the stocks like below, would be out from F&O soon,

1. ALLAHABAD BANK
2. ANDRA BANK
3. BALRAMCHIN
4. BERGER PAINT
5. CADILA HEALTHCARE LTD
6. GODFREY PHILLIPS INDIA LTD
7. HINDUSTAN CONSTRUCTION CO [HCC]
8. IFCI
9. JUST DIAL
10. MRPL
11. ORIENTAL BANK OF COMMERCE [ORINTBANK]
12. PTC INDIA LIMITED
13. RELIANCE NAVAL & ENGG LTD [RNAVAL]
14. SREI INFRASTRUCTURE [SREINFRA]
15. SYNDICATE BANK
16. WOCKHARDT LIMITED
17. & MORE..

This is my approx calculation using both criteria on LAST MONTH of MARCH data. Last month have huge volatility so volumes are already on the higher side for most of stocks.
But SEBI cleverly made the rule is harsh enough not average but "criteria are to be met for a continuous period of six months" So eventually more stocks would be out of F&O soon.

There is another additional criteria 4TH ONE which I have not checked.

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This is a huge blow to CASH MARKET TRADERS also for above stocks.
As for stocks inside Futures and Options have no circuit filters(fixed upper and lower circuit limits for a day), they can go beyond 20%. They only have daily dynamic price bands.
Ultimately it is a big negative for investors and intraday traders as 20% circuit filters will apply to these stocks soon.

 

[Smart_trade]

Now that the circular has come from SEBI , Stock Exchanges will have no option but to follow it.

ST

 

[timepass]

How will they physically settle the index contracts ?? Nifty, banknifty etc. ??

 

[soft_trader]

How will they physically settle the index contracts ?? Nifty, banknifty etc. ??

Physical settlement applicable only for stock derivatives. Index derivatives will be cash settled

 

[soft_trader]

I have a question to senior members.
In case of options, physical settlement/delivery of shares applicable only for options expiring ITM?
In my opinion physical settlement will create unnecessary confusion and chaos.

 

[soft_trader]

Is SEBI being a nanny to investors?

https://www.thehindubusinessline.co...eing-a-nanny-to-investors/article23515378.ece

 

[timepass]

Looks like the midcaps will be the worst affected. They will only be hedged against the index.

 

[headstrong007]

........sorry, double post......

 

[headstrong007]

.....double post....due to some connectin problem.