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

[cinderblock]

I still think the main "culprit" here is the way options turnover is calculated / reported.

 

[vikas2131]

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

whole market liquidity will collapse if such strict regulations were to brought in.. south korea tried this and volume collapsed more than 60 %

 

[vikas2131]

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

St da it all depends how options exposure will calculated. It is possible that for buy side in options, they might just take premium as exposure not nominal value. Yet i feel, they would introduce some minimum net worth like 5 lakh or so to make sure only people with enough capital could trade derivatives.

 

[sumosanammain]

Even if you have a net worth of 10 Cr, you wont be able to trade, as liquidity is going to be destroyed. Would you trade with 5 or maybe 10 point buy and sell gaps in Nifty?

 

[superman]

If we sit quiet, nothing will happen.
Some members are saying if traders have a track record, govt will allow more leverage or take our case. It will never happen unless we fight for it.


I will write a detailed mail to SEBI chief and other board members, Will contact press but before that I need to know who can regulate SEBI if they abuse their powers.

The first body that comes in my mind is CCI. Competition commission of India. Their job is to stop abuse of powers/monopoly and help the general public. Just now filed a RTI asking them whether they can take complaints against govt body and whether the can help us. Its a long shot but will try everything !

RTI text :

Background : I have some questions to CCI . I have complaint against SEBI. As you know SEBI is the regulator of securities in India. Its job is to create a level playing field and allow everyone to prosper via Equities. Recently SEBI is acting not on behalf of retail investors but against it. Its abusing its powers to curb the retail participation in Equity.There are plans to cut the retail participation in Mutual Funds, Equities, Derivatives and other security instrument. We will go back to the license raj era if this gets implemented where it will benefit only the rich and HNI /Foreign investors.

Questions to CCI:

I have the following questions to CCI.

1) Will CCI take compliant against a government body if it abuses the monopoly or power and act in discriminatory manner.

2) Does SEBI come under CCI and whether CCI can conduct an investigation against SEBI and its board members for taking the side of rich HNIs / Foreign investors and abusing their power thereby causing huge problems to retail investors.

3)One of the CCIs purpose is stated as below

Competition is the best means of ensuring that the Common Man or Aam Aadmi has access to the broadest range of goods and services at the most competitive prices. In view of above statement,does CCI believe in having a level and fair field in Equity market.

4) Why is there only 2 dominant exchanges in India : NSE and BSE.
Isnt it anti competitive to restrict private players from creating their own exchange. In many other countries they have their own private exchange.

 

[Vitthala]

If we sit quiet, nothing will happen.
Some members are saying if traders have a track record, govt will allow more leverage or take our case. It will never happen unless we fight for it.

its a generation notion that 95% traders are loosing,then why Govt/SEBI will consider the records of remaining 5% traders?
if those 5% traders really making money means they are skilled enough and have adequate fund to trade.
they will simply buy and hold

And many traders dont have ITR that means they dont have any income source or they have just 1L income yearly??and we think that Govt should allow us to trade a contract whose value is 10-15L??
its like,I dont have any ITR and I am going to bank asking for home loan worth 15L
this is what @Smart_trade Dada said in same thread and i am agreed to this point.

 

[headstrong007]

If we sit quiet, nothing will happen.
Some members are saying if traders have a track record, govt will allow more leverage or take our case.
It will never happen unless we fight for it.
.......

Yes, nothing will happen unless we bring a tough fight together. Unity is the Strength.
In this one of the oldest and popular forum traders are being united slowly.
I saw some old ids suddenly come alive. Traders are very much worried about the trading profession as a whole, bcoz net-worth bases exposure will hurt every type of traders.
For example, even if a trader is trading with 80 lakh capital, net-worth based calculation will end his freedom to take position freely.

I saw traders in tradingqna forums members are united. Some members there shared trajerji post there too. With time more and more traders will interact with each other as a group to tackle the adversity.

Traders, trading online are already internet savvy, most of them are young population. They are educated, intelligent and smart enough to build protest peacefully and logically. I hope together we can stop it.

This is a much bigger issue than that STT trap, which got attention after someone lost huge money and successful petition against it. This also the movement will get actual popularity/strength only after such a draconian rule is implemented.

Let's be optimistic and in the meantime concentrate on trading more. Plese, don't lose your concentration in trading due to anger or fear. We traders are used to controlling our emotions better than the general public.

One of my trader friends has contacted CNBC Awaz & Money Control team and express our concern.
Let's hope for the Best.

 

[superman]

its a generation notion that 95% traders are loosing,then why Govt/SEBI will consider the records of remaining 5% traders?
if those 5% traders really making money means they are skilled enough and have adequate fund to trade.
they will simply buy and hold

And many traders dont have ITR that means they dont have any income source or they have just 1L income yearly??and we think that Govt should allow us to trade a contract whose value is 10-15L??
its like,I dont have any ITR and I am going to bank asking for home loan worth 15L
this is what @Smart_trade Dada said in same thread and i am agreed to this point.

Its wrong thinking ,,
People dont have money for Expensive phones , homes and other stuffs, They pay via EMI right ,, If you go by that approach then no one should spend more than they have . Do you know what will happen if govt says like that ? Our GDP will reduce by more than half ! In case you have not noticed spending above the means is fueling most of the growth in all countries !

If people are reckless about EMI, Leverage they will suffer ! If SEBI increases the lot size or says 10Lakh is the min limit, people will borrow more and they will be under more pressure. Govt cannot be a nanny or daddy for us !

And who are we to decide how much each person should invest/trade with ? We have a robust VAR / SPAN margin concept which has worked well even in 2008 , so there is not really any counter party risk. And ITR is already sort of mandatory to deal with derivatives. if I show 1 lakh income and bring in 10lakh margin, Income tax has the right to ask me where this 10 lakh has come, Its none of SEBI's business to tell me if I am willing to spend my entire net worth in derivatives. If I lose, I lose ! I dont blame SEBI and ask their money for it

 

[headstrong007]

its a generation notion that 95% traders are loosing,then why Govt/SEBI will consider the records of remaining 5% traders?

Be optimistic and didn't loose your hope.

Take my word, it's the remaining 5%
- the traders who are earning consistently will ultimately take the final and active fight to the Supreme Court for the rest of traders community. This is probably the only possible way to stop SEBI.

Such traders are also first to come and build protest. Here also, most of the members who are posting and expressing concern are earning from trading. And few confident traders who believe they can achieve the success in trading are usually also part of the active protest.

Take simple mathematics if some discount brokers have 6 lakh active traders and only 5% are making money consistently. It's only about 3000. So, not many traders may actively participate or join in such a petition or movements.

Here actually only a few will ultimately fight the case till the end, who actually mostly suffers. So, don't count the numbers.
I am hopeful.

 

[superman]

its a generation notion that 95% traders are loosing,then why Govt/SEBI will consider the records of remaining 5% traders?
if those 5% traders really making money means they are skilled enough and have adequate fund to trade.
they will simply buy and hold

And many traders dont have ITR that means they dont have any income source or they have just 1L income yearly??and we think that Govt should allow us to trade a contract whose value is 10-15L??
its like,I dont have any ITR and I am going to bank asking for home loan worth 15L
this is what @Smart_trade Dada said in same thread and i am agreed to this point.

You have no idea if liquidity dries off, buy and hold also will suffer spread of 2-3 % ! All our markets are so liquid thanks to traders and algo's . They are curbing use of algos also.

If everyone runs off, every scrip will either enter upper circuit or lower circuit , nothing in between