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

[soft_trader]

https://economictimes.indiatimes.co...ons-in-ifsc/articleshow/63959547.cms?from=mdr

It's funny isn't it that STT was introduced & justified under the pretext that foreign traders were getting tax benefits over Indian traders (at least that seemed to be one of the justifications based on a research-paper I've read), & now, there's a special exchange setup for letting foreign players get tax benefits in terms of STT & other taxes, & yet, Indian traders would still be stuck with it. As logic would dictate, since the government introduced STT to level the playing-field for foreign & Indian traders, for the same reason, now they should reduce/eliminate STT for EVERYONE.

Couldn't agree more. Charging STT at the time especially when both STCG and LTCG is present is nothing but draconian dual taxation policy.

 

[Newbie Day-Trader]

As long as it brings Dollars to India, they will do anything.

I know, & I'm not opposed to that in any way but I'm merely pointing out that one of their original reasons for bringing in STT - "to bring Indian investors on a level playing-field with foreign investors trading Indian markets" - doesn't exist anymore, which exposes the fact that they don't care about Indian investors as they'd claimed, & it's all about their greed, & raking in as much tax-money as they can, any way they can.

 

[TraderGYO]

I know, & I'm not opposed to that in any way but I'm merely pointing out that one of their original reasons for bringing in STT - "to bring Indian investors on a level playing-field with foreign investors trading Indian markets" - doesn't exist anymore, which exposes the fact that they don't care about Indian investors as they'd claimed, & it's all about their greed, & raking in as much tax-money as they can, any way they can.

Absolutely, no doubt about it.
What pains me more is the fact that even if they get exposed they know we would not be able to do a thing.

 

[okabira]

Singapore
max tax in singapore .. 22% + 7% max gst
HDI = 5
GDP = 554 billion

India
here 30 % + 28% max gst
HDI = 131 ..
GDP = 2.8 trillion

by population India is very huge .. understandable
but HDI 131 ?? man ssly .. even that tiny sri lanka sits at 73 (comparing income)

if you know HDI = education + Income + Life Expectancy

1. gormint taking 2x tax and barring educated traders ..
2. gormint taking 2x tax and also not improving the education system ... chal rha hai jaisa bhi hai..
=> go to some village ... I am not taking about villages in bangalore and pune.. go to some remote villages truly..
=> or search youtube videos on current condition of professors.

go to some govt facilitated colleges.. some labs are just names .. they dont have even basic enough apparatus ...
(talking because I am an engineer myself)

3. put some more tax... and you are left with pennies in income.. ..
=> the amount of hours we work and the income compared to foreign land is pathetic.
=> gormint will say ... kharcha kahan hai India may
=> But man hours is man hours. ... its expenditure is not your concern .. the effort should be rewarded.

4. high life expectancy is majorly contributed by diet . diet specially rich in protein and carbs
but with pennies left ... all i can buy is sookhi roti and some chai ...

keep knocking on doors for business,,

gormint doesnt understand .. no one likes to put foot in a puddle .. everybody wants to drive on clean roads..

first improve the basics ... business will come automatically ... get this in their tiny brains.

 

[Tejas Khoday]

Do any of you see the physical settlement of stock derivatives as a disadvantage of sorts to retail traders?

If yes, why? I'm eager to understand why you think so. Please give objective reasons because according to me, it's a good decision by SEBI.

 

[GENIETRADE]

Do any of you see the physical settlement of stock derivatives as a disadvantage of sorts to retail traders?

If yes, why? I'm eager to understand why you think so. Please give objective reasons because according to me, it's a good decision by SEBI.

One potential reason i see is that the lot size is bigger for the retailer. If the lot size is uniformly 100 qty like US, that would have help. If the lot size is made 10 qty that would be wonderful.

With Rs.2 lakhs capital, now i am able to trade VEDL futures 6 lots (1750 x6 = 10500) intraday. If it is to be settled physically I should posses atleast Rs.30 lakhs plus.

 

[soft_trader]

Do any of you see the physical settlement of stock derivatives as a disadvantage of sorts to retail traders?

If yes, why? I'm eager to understand why you think so. Please give objective reasons because according to me, it's a good decision by SEBI.

Obviously it is a huge disadvantage. what if I have a short position and unable to close it during expiry due to some unavoidable circumstances such as internet problem or software error? I will be slapped with huge penalty of short delivery and auction. Similar for long position also, how many retail trader have so much money in their trading account to take delivery of shares? and even if one has that amount of capital he/she will need to again sell those stocks to release margin which will attract huge STT because both buy+sell delivery trades attract huge STT. Not to mention the T+2 cycle which one has to follow, so 2 trading days wasted after expiry day.

 

[bpr]

for physical delivery for stock futures I don't see any issue .. instead of expiry you will be forced to roll over few days before ...
say 3 days .. if u want to hold in the last 3 days then you will need full margin ... and the brokers will enforce this ..
I think we have a similar setup for gold futures ... the broker will not allow you to hold position in the last five days ...

 

[soft_trader]

for physical delivery for stock futures I don't see any issue .. instead of expiry you will be forced to roll over few days before ...
say 3 days .. if u want to hold in the last 3 days then you will need full margin ... and the brokers will enforce this ..
I think we have a similar setup for gold futures ... the broker will not allow you to hold position in the last five days ...

what will happen to options? if this happens in options as well, then the days of OTM option writing on expiry day will be over which will be a nightmare for traders.

 

[vikas2131]

Do any of you see the physical settlement of stock derivatives as a disadvantage of sorts to retail traders?

If yes, why? I'm eager to understand why you think so. Please give objective reasons because according to me, it's a good decision by SEBI.

The problem with physical delivery is that it is close to impossible to short-sell a stock in the Indian market. We have seen this in the cash segment. While a short-selling mechanism exists in theory, shorting stocks outside the F&O segment, except in day trades is impractical.

The short-seller must borrow stocks from some institution that holds it in the portfolio. This involves first, the willingness of such an institution to lend stock. It also involves paying interest, and having to buyback from the market to replace the stock and complete the trade.

The inability to short sell stocks in the cash segment causes less efficient price discovery. In stocks with low free-float, it can lead to a situation where trading stops, with near-zero volume and quotes that fail to reflect changes in the corporate's business situation. It can also lead to short-squeezes as in the bad old days of badla, where short-sellers cannot cover a trade. That is a classic manipulative situation where institutions with large holdings can control the price of a share.

The F&O segment was created to avoid such inefficiencies in large caps. This system has worked quite well. The premium/ discount between futures and cash prices are generally close to the cost of carry. By forcing physical settlement, the distinctions between cash segment and F&O are being reduced.

The likely result will be a reduction in volumes across cash and derivatives segment and a rise in bid-ask spreads. Impact costs are bound to rise. Institutions and large investors, which hold large portfolios of underlying stocks will also have an enhanced power to manipulate prices since they will effectively be the only short-players.

http://www.business-standard.com/ar...very-of-stock-derivatives-118042300171_1.html