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

[kainiteh]

Please explain how it’ll affects intraday trading??
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F&O volumes will be dried up. Intraday traders will face wider bid-ask the difference.

Many option writers would skip such stocks due to physical settlement, so intraday option traders will face more heat --> liquidity problem.

Breakeven and impact cost will be higher. The final result might be the complete shutdown of such low liquid stocks from F&O as they will fail to meet min volume/turnover, new strict rule by SEBI. Within next few years, we will see the actual ill effects. SEBI simply want to kick out as many stocks as possible from Derivative Segment.

Thanks,
So we left with index as you mentioned earlier
Increase the lot size will affect our trading...
CDS and MCX is an alternative that stay in day trading of derivatives


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[headstrong007]

Thanks,
So we left with index as you mentioned earlier
Increase the lot size will affect our trading...
CDS and MCX is an alternative that stay in day trading of derivatives

Sent from my iPhone using Tapatalk

The bad news is Govt is behind the move to attract more STT from Cash Market. So more measures will arrive soon.
They already proposed Physical Settlement in Commodities too.
And CDS is not the right alternative also for most of the traders.

Yes, we left with Index currently, but tax-hungry Gormint can do anything.

 

[kainiteh]

Thanks,
So we left with index as you mentioned earlier
Increase the lot size will affect our trading...
CDS and MCX is an alternative that stay in day trading of derivatives

Sent from my iPhone using Tapatalk

The bad news is Govt is behind the move to attract more STT from Cash Market. So more measure will arrive soon.
They already proposed Physical Settlement in Commodities too.
And CDS is not the right alternative also for most of the traders.

Yes, we left with Index currently, but tax-hungry Gormint can do anything.

Thanks

Sent from my iPhone using Tapatalk

 

[bpr]

No. It will get cash settled if you squareoff anytime before 3:30pm on expiry day.

wording is wrong here ... technically speaking there is no settlement ...settlement only happens in expiry ...
if you sell before that then it is just that you will get whatever price sold / bought.

 

[bpr]

The bad news is Govt is behind the move to attract more STT from Cash Market. So more measures will arrive soon.
They already proposed Physical Settlement in Commodities too.
And CDS is not the right alternative also for most of the traders.

Yes, we left with Index currently, but tax-hungry Gormint can do anything.

we already have physical settlement for gold and silver ? am i right ?

 

[Newbie Day-Trader]

A Fifth Of Stocks In NSE Derivatives Segment To Move To Physical Settlement From July.

NSE announces 46 stocks for physical settlement.
OTM Option writers will face the heat, some are making easy money on expiry, they let them expire worthless! Now they will face physical settlement! If writers exit, buyers would not get the good price(wider bid-ask) for short-term trading. Roll over in future possible but not always possible in stock specific options, especially in such low liquid stocks.
Many times buyers trapped and they will find it difficult to sell due to low liquidity, now physical settlement will add up their sorrows.

SEBI is actually banning option trading in individual low liquid stocks indirectly.

************
Here are the list of stocks that will be settled via physical settlement from July contract onwards in line with the SEBI guidelines,

1. Adani Power Ltd.
2. Ajanta Pharma Ltd.
3. Allahabad Bank
4. Andhra Bank
5. Balrampur Chini Mills Ltd.
6. Beml Ltd.
7. Berger Paints (I) Ltd,
8. Can Fin Homes Ltd.
9. CG power And Industrial Solutions Ltd.
10. Chennai Petroleum Corporation Ltd.
11. DCB Bank Ltd.
12. Godfrey Phillips India Ltd.
13. Godrej Industries Ltd.
14. Granules India Ltd.
15. Gujarat State Fertilizers & Chemicals Ltd.
16. Hexaware Technologies Ltd.
17. Hindustan Construction Company Ltd.
18. IDBI Bank Ltd.
19. IFCI Ltd.
20. Jaiprakash Associates Ltd.
21. Just Dial Ltd.
22. Kaveri Seed Company Ltd.
23. Kpit Technologies Ltd.
24. Mahanagar Gas Ltd.
25. Mangalore Refinery And Petrochemicals Ltd.
26. NHPC Ltd.
27. NIIT Technologies Ltd.
28. Oil India Ltd.
29. Oracle Financial Services Software Ltd.
30. Oriental Bank Of Commerce
31. PTC India Ltd.
32. PVR Ltd.
33. Reliance Communications Ltd.
34. Reliance Naval And Engineering Ltd.
35. Reliance Power Ltd.
36. Repco Home Finance Ltd.
37. Siemens Ltd.
38. SREI Infrastructure Finance Ltd.
39. SRF Ltd.
40. Syndicate Bank
41. The Ramco Cements Ltd.
42. Torrent Power Ltd.
43. TV18 Broadcast Ltd.
44. United Breweries Ltd.
45. V-guard Industries Ltd.
46. Wockhardt Ltd.

https://www.bloombergquint.com/markets/2018/04/23/a-fifth-of-stocks-in-nse-derivatives-segment-to-move-to-physical-settlement-from-july

Maybe I'm just trying to be optimistic but I hope the drop in volumes in these F&O stocks will shift to the remaining 150+ F&O stocks, & boost volumes & liquidity there. Of course, if SEBI decides to raise lot-sizes or puts a very strict income-restriction on F&O trading, then that could probably cause irreparable damage to the F&O segment; & by the time, SEBI & the government realize that their tax-income has gone down & not up, it might be too late.

 

[headstrong007]

we already have physical settlement for gold and silver ? am i right ?

Yes, but currently such physical settlement is optional. They are talking about compulsory physical settlement using spot exchanges for all contracts. Still, spot exchanges are not set up.

https://www.moneycontrol.com/news/b...base-metals-gold-and-natural-gas-2531683.html

**********
Already, National Spot Exchange scam derailed commodity market in 2013!

https://www.businesstoday.in/topics...ange-dents-commodity-market/story/201769.html

 

[kainiteh]

we already have physical settlement for gold and silver ? am i right ?

Yes, but currently such physical settlement is optional. They are talking about compulsory physical settlement using spot exchanges for all contracts. Still, spot exchanges are not set up.

https://www.moneycontrol.com/news/b...base-metals-gold-and-natural-gas-2531683.html

Bro.. what is best way to stay like today in future...
I am really worried... we should have some way to stay in market

 

[Newbie Day-Trader]

https://www.moneylife.in/article/se...bout-derivatives-settlement-market/53791.html

SEBI wants to limit trading in derivatives to individuals on the basis of a sum computed on their disclosed income-tax returns. Intermediaries will be made to “undertake rigorous due diligence and take appropriate documentation from the investor.” An anonymous whistleblower, claiming to be an SMAC member, says that SEBI’s decisions are completely against the recommendations of SMAC, where most members, including the chairman, were of the view that the measures announced by SEBI would, in fact, ‘kill the derivatives market’ and, at the same time, not help improve the cash segment.

Maybe.... hopefully, something positive will come out of this & commonsense will prevail.

Folks,

I don't know why my post was deleted here. Its alright, I am re-posting again. I have written an article which was published by Financial Express about the potential impact of SEBI's move to regulate retail traders' participation in derivatives. If you like what I have written, feel free to share it within your circles. We hope that traders will be empowered rather than discouraged.

https://www.financialexpress.com/mo...vatives-will-impact-retail-investors/1143544/

Apart from the point about options turnover, I think you made a very good point that's not always brought up, that because the Indian market is so highly regulated & has onerous taxation, a lot of foreign players don't want to trade here directly, which is why the retail participation SEEMS bigger, even though it mightn't actually be the case if we were to see the whole picture.

 

[headstrong007]

Bro.. what is best way to stay like today in future...
I am really worried... we should have some way to stay in market

Don't worry too much, traders are dynamic in nature, we easily adjust changing conditions that's why we survived in the long run.
Let's see how far they could go.
Stock F&O traders(especially stock option traders) will feel the heat most.
As long as Index F&O is there, there is an alternative. And it is not actually possible to ban Index F&O completely.

In my opinion derivative traders, nature is different than cash market traders. By such restriction, stock derivative volumes would not shift to cash market but mostly to other remaining derivatives. Let's see the effect! Already Bank Nifty Weekly Options are gaining popularity every day.