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

[soft_trader]

Bhai tax on LTCG is a good move. govt needs money for vikas.
starting tax is 10% . tax hungry babus will surely increase it in coming years. Service tax was 6 or 8% initially see now 18%. LTCG @10% is too low.
increase LTCG reduce/abolish STT.

I agree with your view that LTGC is likely to go up in future. But the thing is STT won't get abolished easily.

 

[Satya.]

govt will revert bck dis hitler-nazist policy fo sure

 

[soft_trader]

govt will revert bck dis hitler-nazist policy fo sure

question is, when?

 

[Satya.]

question is, when?

oct 01 2019

 

[okabira]

I will now vote for the party that comes out to abolish STT completely..

income tax bhi do .. bridge banane k liye ... STT bhi do wohi bridge banane k liye ?

Tab tak NOTA dabta rahega .. dabta rahega ..

 

[headstrong007]

SEBI increased lots sizes in many popular stock futures from July like RELCAPITAL etc- RELCAPITAL from 500 to 1500. Margin requirement increased by 3 times to cut retailers participation.

Also for physical settlement of 46 stock future brokers demand compulsory square off/rollover before 3-4 days of expiry or full 100% amount (extra 4-5 lakhs per lot like Adani power etc) plus STT for delivery.

Now SEBI wants to implement physical settlement for metals soon.

Thoda STT ke chakkar main ek stable system barbad ho jayaga. Bad move..
Traders will shift to Index F&O to cut their risk. Stock options would lose significant volumes after phased implementation to all F&O stocks (which SEBI already said intend to do).

***********
Equity options the name is meaningful. Options -> bcoz they provide the right, but not the obligation,
Compulsory physical settlement on options is on the contrary to the name of OPTIONS.

****************

Bad effect of physical settlement:-

ZERODHA:-
Compulsory square off before 4 DAYS to expiry. The fresh position will not be allowed to current contract.

Finvasia, is not so stiff like Z.. (like compulsory square off and no fresh position). But they want the whole 100% amount plus STT for delivery which is quite a big amount for F&O traders.

Sending notices like below,

Dear Sir/Madam
As per recent NSE circulars vide reference no NSE/FAOP/37594 dated April 23, 2018 (Circular Attached for reference ) regarding physical settlement in derivative segment (List attached for 46 stock ) and STT applicable on delivery stock (Circular Attached ) dated 17 July 2018, you are requested to either Close or Roll over your open positions to next month (August Expiry ) before the current expiry due date (Thursday 26th July 2018). Further, in case you are interested for Delivery, kindly deposit the additional margin before Monday 23 JULY 2018.
For simplicity, please see below example for understanding delivery margin
---------------------------------------------------------------------------------------
Scrip Name Lot Size Future Margin Price Delivery Margin
(Price X Lot Size)
---------------------------------------------------------------------------------------
ADANIPOWER 20000 162000 20.95 419000
================================================
The above mentioned example table shows if you Roll-over your position then F&O Margin of Rs 162000 is required and STT applicable on F&O. Alternatively, you need to deposit the Delivery Margin of Rs 419000 before Monday 23 July 2018 for carrying the position and STT applicable for Delivery @ 0.10%.
If any clarification, please contact Client Support or your Account Manager.
Thanks
Compliance Team
Finvasia

**********

All this will surely cut retailers participation from STOCK F&O. But, such F&O traders will move to Index F&O, a safer product without the physical settlement.
It will only add up volatility and more whipsaw/fast both side choppy move to Nifty & Bank Nifty.
And we know, SEBI clearly said they don't want extra volatility due to speculation. They are going to be a big failure.
By increasing lot size(to cut retailers participation) they are shifting the small retailer's Future volumes to options(knowingly/unknowingly) which is bad for market structure.

 

[soft_trader]

Brokers clash with NSE over STT on physical settlement in F&O

https://www.thehindubusinessline.co...physical-settlement-in-fo/article24464559.ece

 

[headstrong007]

SEBI is currently working for Government only,
SEBI is bypassing their main goal to protect the small retail investors and brokers.

 

[headstrong007]

From the launch date of derivative NSE-BSE is following The Black-Scholes EUROPEAN OPTION model which makes certain assumptions: The option is European and can only be exercised at expiration.

Physical Settlement is US model, just the opposite, using physical settlement the options can be exercised any time.
SEBI can't mix up Black Scholes model of European option pricing with US model of Physical settlement. Someone must challenge it. Even EUROPE don't have physical settlement rule, as they follow the same Black Scholes Model as NSE.

 

[bpr]

From the launch date of derivative NSE-BSE is following The Black-Scholes EUROPEAN OPTION model which makes certain assumptions: The option is European and can only be exercised at expiration.

Physical Settlement is US model, just the opposite, using physical settlement the options can be exercised any time.
SEBI can't mix up Black Scholes model of European option pricing with US model of Physical settlement. Someone must challenge it. Even EUROPE don't have physical settlement rule, as they follow the same Black Scholes Model as NSE.

I think physical settlement is only at expiry and not anytime.