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

[okabira]

I am really angry this time..how can you stop me to earn my living? I am paying you tax ..even double tax..STT & INCOME TAX ON MY PROFIT..

as I said earlier .. This gormint will tell

what to eat (no beef)
what to drink (alcohol ban)
what to wear (full clothes in 50 deg Celsius)
when to go (dont go outside after 11.00)
where to go (go to temples , but not to bars)

what to trade - dont do fno

bolo sahi kaha ki nahi kaha ? lol

 

[headstrong007]

hi Headstrong Sir
now we have no option except trading Crude oil trading..please teach us crude oil trading step by step..or tell us what will we be studying for learning crude oil.
we try to start trading in crude oil
thanks

Trading crude is much more difficult bro. Crude trading time is good mainly 5 pm-10pm. What we will do in the daytime then?
There is no option chain in crudes to analyze, its only price discovery. We can't judge market sentiment easily too, as it is international commodities. And crude has much higher volatility than nifty. Huge gap up is also there. I trade crude mainly TUES-WED-THURS day evening.

Frankly, speaking, I trade crude confidently only bcoz I am already sitting on a huge profit from Bank Nifty and Nifty. If crude is the only available future script for trading, then I have to go to the drawing board again for fine-tuning strategies! There is much more uncertainty & volatiity in crude, it is called the wild beast.
Sometimes Crude has nice trends but overall trading crude is much more difficult than Nifty-Bank Nifty unless options are introduced there.

 

[headstrong007]

People are already shifting to options from futures, so it is interesting how SEBI can restrict option traders who trading with under 1lakh capital.

Most traders are using the only premium for options trading, so no margin is required. Small exposure like 2 lakh is enough for most of the small traders (probably 80%+ option traders).

So it will be very difficult for SEBI to cut participation in Bank Nifty & Nifty options at least.

There was a report that 77% of Future trading happens in 'Stock Futures'. SEBI's primary target is to shift these Stock Future volumes to cash market by increasing lot size as much as possible.

 

[sumantra]

Hi
Soon you will see Starting of hedge funds in India.SEBI will soon permit Them ..then short deliviery will be possible..but what will retailer do with SHORT DELIVIERY limited exposure which is related to their ITR.

If sebi wants to cut down retail traders, it will never do anything which encourage retail trader..
But restricting traders to trade is the violation of fundamental right of freedom which can be challanged according to constitution..Besides, in business law, its a violation of fair trade practise & promoting monopoly & restricting some players by putting restriction .This rule is against law..but who will listen because retail trader has not loads of money & nor they make any vote bank..
so you will see more ridiculus steps by sebi to reduce retail or stop retail particiapating in f& o..
its like same some big shopkeepers told sebi to shut down all small shopkeepers by making law..besides, force shopkeepers to give their money to big shopkeepers also..
I am really angry this time..how can you stop me to earn my living? I am paying you tax ..even double tax..STT & INCOME TAX ON MY PROFIT..
lets take calculation, if I earn 1000 rs from bank nifty..I give 200 rs to govt, stock exchange & brokers..,...now I have to pay tax on those 800 rs also..
govt , stock exchange or broker ..they all are earning from me..what are they doing to let me do my busineess smoothly..making daily new new stupid laws & impose on me..I have been learning trading after years of hardwork ..& when comes the time to earn from it, they want me to stop my business..
If we provide good ITR also & good networth certificate also..but will the market be tradable? after using of computers & algos, intraday trading is getting more difficult...after reducing retail participation, which gives liquidity, how will I trade such volatile markets..whole techanical analysis & price action will be changed..it will be the market of some big players which is playing my Computers, algos & artifical intelligence also..can I manully compete with?? no..I am out of business!
stock market works on demand & supply..it works because its open & all participants take individual ..this move will be not good for even share market existence & its inddependent working..
I hope this decision will be challanged in court & SC give justice to retail & average person of india
thanks

We have to at first raise a voice in CHANGE.ORG. Then file a PIL in supreme court. But the first and foremost criteria would be we have to be united to give them a hard blow.

 

[praveen98]

Is not lying on ITR considered a crime?
And if SEBI really wants to average ITRs of last 3 years why not announce that 3 years in advanced?
How can a young newcomer individual show 3 ITRs of the past ?

Hi TG,
I am not asking any body to lie about the income in the first place. IT act mandates every adult to file income tax return every year(Irrespective of whether or not you have taxable income). Now every body who is holding a trading account and holds PAN card, so even if you do not have taxable income you are supposed to file ITR .Whether SEBI will take 3 years or not i have no idea. But you can file ITR up to previous 3 financial years, so if any body neglected filing ITR just because they don't have taxable income, my suggestion to them is to file ITR at least now. Filing ITR will help you in building a record, which will help you in future banking transactions also.
Don't you think it is against principles of natural Justice to restrict trader's exposure?! One can have multiple trading accounts and how SEBI can control the exposure of each client in real time? These are all problems in implementation....In my opinion it is very difficult to implement the regulation in the current frame work and infra structure through which transactions are taking place.
My suggestion is to file ITR as per your truthful income only. if in any way my earlier post gives an impression to file income up to 2.5 lks without having any income i am extremely sorry and my intent is to suggest newbies to make it a habit to file ITR according to their truthful incomes even though their income is below taxable level...It will be of great help in future....
All the Best

 

[headstrong007]

I don't think income proof is required for trading/exposure in F&O for various reasons:-

1. BACKING:-
For example, an incomeless housewife can have family members backing, like from husband, father in law, father, mother. A student may have backing from father, mother, grandfather.

2. NETWORTH OR INVOLVED CAPITAL:-
Total capital involved and net worth is much more important!
Legally any incomeless person can start trading with enough capital acquired from inheritance suddenly.
As per income tax rule, F&O trading is a business. Maybe an incomeless person took a business loan using other assets for trading F&O! Then, how SEBI could deny the fundamental right to do a business!

If someone has enough capital for trading, no one can deny entry in F&O. Anyone can challenge the rule in Court, NETWORTH or TOTAL CAPITAL INVOLVED IN TRADING is important NOT the INCOME PROOF. IMO.

 

[TraderGYO]

Hi TG,
I am not asking any body to lie about the income in the first place. IT act mandates every adult to file income tax return every year(Irrespective of whether or not you have taxable income). Now every body who is holding a trading account and holds PAN card, so even if you do not have taxable income you are supposed to file ITR .Whether SEBI will take 3 years or not i have no idea. But you can file ITR up to previous 3 financial years, so if any body neglected filing ITR just because they don't have taxable income, my suggestion to them is to file ITR at least now. Filing ITR will help you in building a record, which will help you in future banking transactions also.
Don't you think it is against principles of natural Justice to restrict trader's exposure?! One can have multiple trading accounts and how SEBI can control the exposure of each client in real time? These are all problems in implementation....In my opinion it is very difficult to implement the regulation in the current frame work and infra structure through which transactions are taking place.
My suggestion is to file ITR as per your truthful income only. if in any way my earlier post gives an impression to file income up to 2.5 lks without having any income i am extremely sorry and my intent is to suggest newbies to make it a habit to file ITR according to their truthful incomes even though their income is below taxable level...It will be of great help in future....
All the Best

You have made an excellent point. As any other new incoming trader I was too fixated on back-testing, on my strategies and etc but forgot about ITRs. As a student I was too ignorant about taxes. Your post is a wake up call to me and many others for that I thank you, Praveenji.

 

[Just-Trade]

I don't think income proof is required for trading/exposure in F&O for various reasons:-

1. BACKING:-
For example, an incomeless housewife can have family members backing, like from husband, father in law, father, mother. A student may have backing from father, mother, grandfather.

2. NETWORTH OR INVOLVED CAPITAL:-
Total capital involved and net worth is much more important!
Legally any incomeless person can start trading with enough capital acquired from inheritance suddenly.
As per income tax rule, F&O trading is a business. Maybe an incomeless person took a business loan using other assets for trading F&O! Then, how SEBI could deny the fundamental right to do a business!

If someone has enough capital for trading, no one can deny entry in F&O. Anyone can challenge the rule in Court, NETWORTH or TOTAL CAPITAL INVOLVED IN TRADING is important NOT the INCOME PROOF. IMO.

yeah it could be right. One second option also could be possible. In US, a minimum balance(approx $25000) has to be kept in trading account for day traders(FnO).
Such rules could be brought here too. A minimum balance lets say 1 lakh to be kept in trading account for FnO trading.

Just-Trade

 

[TraderGYO]

I don't think income proof is required for trading/exposure in F&O for various reasons:-

1. BACKING:-
For example, an incomeless housewife can have family members backing, like from husband, father in law, father, mother. A student may have backing from father, mother, grandfather.

2. NETWORTH OR INVOLVED CAPITAL:-
Total capital involved and net worth is much more important!
Legally any incomeless person can start trading with enough capital acquired from inheritance suddenly.
As per income tax rule, F&O trading is a business. Maybe an incomeless person took a business loan using other assets for trading F&O! Then, how SEBI could deny the fundamental right to do a business!

If someone has enough capital for trading, no one can deny entry in F&O. Anyone can challenge the rule in Court, NETWORTH or TOTAL CAPITAL INVOLVED IN TRADING is important NOT the INCOME PROOF. IMO.

That point about net-worth is a valid point. Let's see what sebi comes up with.

 

[TraderGYO]

yeah it could be right. One second option also could be possible. In US, a minimum balance(approx $25000) has to be kept in trading account for day traders(FnO).
Such rules could be brought here too. A minimum balance lets say 1 lakh to be kept in trading account for FnO trading.

Just-Trade

A speculation - It will not be too long before some Gorment babu discovers pattern-day trading rule.