Its great that , at least you are mentioning F&O traders as F&O investors !!!
1 Like
I am also works like him in a factory , but our factory makes Jalebi 
Na I am fellow retail participant like everyone else. I know the remedy though if SEBI thinks it can stop us and passes any regulations as such. Itâs just that I am so neck deep in one civil case of my fatherâs property and with a job on top of my head that I am unable to do anything much.
But I am pretty sure zerodha has enough resources to send their advocate to Delhi and remind SEBI that they are not absolute and canât keep discriminating retail participants against institutions irrespective whether we win or lose as such stock market itself is fair only and doesnât discriminate anyone unless big players keep manipulating market.
But, whatâs the incentive for an incumbent like Zerodha to do that?
More incremental regulations (and any complexities gradually/constantly being added)
usually act as a deterrent for any upcoming competitors
as the incumbent has the scale to deal with them compared to the upcoming competitors.
âŚwhich is happening on a regular basis. Right ?
So, does that mean more guardrails required? 
Thought-A.
the type of trading activities being disincentivised
Is there a way to frame them as a non-zero-sum game?
Thought-B.
Does the regulator find themself in a trolley problem scenario?
1 Like
I am of view itâs their obligation to us being largest broker house of retail participants of stock market.
Plus wasnât the entire zerodhaâs project and product was about bringing people to stock market from traditional asset classes such as real estate & gold wasnât it. Itâs not like people donât speculate or trade nor invest, they just do it in different market.sure people are making losses but people in other market make loss as well. I donât see much difference. Honestly itâs a plus because even if money goes to big institutions, it comes back to economy and govt gets taxes etc.
That happens in real estate and else where as well. If we take asset classes view if there is market say precious metals (gold & silver), real estate itâs there too. Even in vegetable market you might have heard news of middle men traders hoarding onion or farmers dumping tomatoes on road because price fell off. You might have heard price Of onion going sky rocket. Pump & dump are all there. However stock is lot lot regulated compared to others. This is my view.
For some avg Indian guy having money to start bussiness whether he starts doing vegetable bussiness like middle man or the stock market, stock market are lot cheaper and far regulated, far regulated than real estate.
Saying zero sum blinds people. Itâs not gambling or poker. Are we forgetting F&O evolved from forwards market? Forwards market was there since long before
What is F&O? At the core itâs a contract between you and the seller/buyer where you take risk of underlying and pay/recieve payment in future. Itâs a contract. Essentially you get paid for risk you take. Itâs basically like insurance bussiness. F&O is a bussiness Even ITD treats it as bussiness.
Now look If majority of people are bad at a particular bussiness, itâs their problem. People should test thoroughly, have DD , be psychologically prepared and not have insane expectations with 300% return or something and be bought by leverage.
The only problem I see it as zerodha or technology has over simplified it as showing a button to initiate orders and psychologically people have mistaken it for gambling or something else. Even when you click behind scenes lot of things happen. Itâs a contracts bussiness at the end of day more or less like a insurance for stock holders.
My view is people should approach it as bussiness. Everyone had right to trade and commerce
2 Likes
The primary goal is hedging or insurance. 
Speculators add liquidity. 
I donât buy into the argument this is a zero sum game, buyers and sellers are providing value to each other. 
1 Like
Very well made points.
Yes. And de-regulation of this relatively better market in the name of âfree-marketâ is only in the interests of the select few at the expense of the majority (who donât even seem to realize it).
While one extreme âLicense-rajâ would be bad.
The other extreme is even worse.
So, letâs not do either.
Beyond a certain scale,
it is no longer a âtheir problemâ but an âour problemâ for the society as a whole.
Are we at that scale yet? No? Trending towards it? Yes?
Wouldnât an uninformed speculator add noise and
also increase the cost borne by the other participants,
acting as an amplifier for the manipulators.
without adding value.
IMHO, heavy-handed restrictions are short-term âband-aidsâ or âtourniquetsâ
that will only go so far to slow-down the inevitable decline of the market.
Education (both literacy as well as financial) is what stands a chance
of preventing the ultimate decline of a market over the long-term.
Look at it logically, money lost by retailers go to big institutions simply come back to same economy. I donât see it as a problem.
Trending towards it is overstatement. Honestly retail participants of stock market are like 5% of entire Indian population. We are tiny minority, because the majority are wired to go around traditional asset class real estate and gold.
Dumb money is there everywhere, not just in stock market 
. Say you are giving 50 rs per sqft land in middle of halasuru lake in Bangalore BDA approved, you will find people queuing to buy it even if it floods on monsoon season . Greater fool theory and herd mentality is real.
100% agree with this , but more than That greed is main problem everywhere. That canât be helped.
But also not helped by people selling stuff claiming easy money. Even brokers do it.
Somehow people should be made to understand that there is no easy money here. SEBI did take a step in that direction by daily warnings.
Even sustained effort is not guaranteed to make you money. Luck and skill both matter, if you study wrong stuff and dont course correct and get lucky and find something worth studying, no amount of study will do anything. And just studying probably wont work, need to apply, gain skill and adapt to target market. And things can change and we need to adapt again. Its crazy that after all this, in the end simple things can make money.
Same stuff happens in equity investing too, only it takes longer and you are probably not leveraged and you have some help from the underlying positive movement. But people âinvestingâ in penny stocks, sme ipos, just chasing all ipos, chasing what made huge gains in recent years, averaging after huge falls looking at past, looking at fundas in a primitive way without understanding, etc etc etc
Fool and his money âŚ
Concentration of wealth is increasing.
Trickle-down economics doesnât work.
The same arguments apply here.
1. At scale, as a society, we are in this together.
Forget emotions/kindness,
it doesnât make economic sense
to setup our âfellow-manâ for failure
due to their ignorance or lack of time/money.
It is in our own individual best interests to not be divided
on the basis on financial awareness/abilities/wealth.
2. Tail cannot wag the dog.
If one is an enabler, engaged in supporting some other primary activity,
then thereâs a fundamental upper-limit
to how much value one can claim to add by enabling the primary activity.
(i.e the value being added by the other activity)
Donât put the cart before the horse.
Any retail trader feeling smug that they are better than the âaverage joeâ,
Where will they be once the supply of âfoolish moneyâ dries up?
Wait? Is THAT the concern with increasing regulations?
that the constant supply of marks/schmucks will stop?
1 Like
I do agree with this. But blaming trading for that, dunno about that.
I think taxation rules are probably most to blame among other things.
Capital gains for one, is most lightly taxed and allowed to compound without yearly friction that a salaried guy will have to deal with.
One can argue that salary guy can also invest, but proportion of income invested will be much lower vs ultra rich.
Warren Buffet himself said so, and thatâs when i realized it.
I read an article sometime back where they said that this lack of friction to CG mathematically lead to concentration of income.
I am sure there are many other things and if one wants yes blame trading.
There is no way to know for sure, but i think this may not necessarily be true.
Just a small sample but - intraday stock traders had a terrible time in general for few years from 2021 when the masses started buying like there is no tomorrow.
Many things did not work as well or stopped working.
Perhaps they added noise, dunno.
Who decides that ? Different people will have different views on what is adding value and to what extent.
Considering how people behave, governments behave, i think this applies very loosely.
Really ? Does this actually happen anywhere ? Communism perhaps, but that doesnât seem to work.
Best seem to the socialist democracies in Scandinavian countries, dunno.
But why this comes up in trading only. Then we can apply this everywhere. Perhaps people going to IIT should be selected by lottery system to not discriminate against people who did not / could not compete?
Perhaps for jobs too ?
Anyway, this seems very out of topic.
I would call it a mix of exploitation by some ( people selling things while claiming easy money, including brokers ) and arrogance by the common to think that they will just come in and make money like there is no tomorrow. They dont even wait to test things. Whose fault is that? And once people lose, ofc blame anyone who makes money.
I also was foolish in my early years to a small extent - in investing - but i take most of the blame for that. All these research reports by different institutions did not help either if they donât handhold you as you are gonna make rookie mistakes.
So i would say some kind of low level education, practical education, over money matters is necessary and has been missed. And we need stick to go after the exploiters.
But blaming trading and traders for that seems unreasonable. Just look at the SEBI prompt you get everyday on login to broker. Most of the money people lose in active trading goes to the government because of excessive taxation. If taxes were lower, fewer people would probably lose or lose less.
Also, as i said - same shit happens in investing, but no one seems to notice in a bull market.
Anyway, i donât have a major stake in fno trading, and probably wont in near future. So perhaps i am unbiased enough for this.
Also - I strongly think that there must be initial breaks for people who start trading with leverage. But they also must be allowed freedom to fail at some point. If an exam helps, so be it.
2 Likes
Average Joe can make 1% or 2% , they donât lose everything and can call it zero sum game and think of it like some gambling machine and hit 2 buttons Buy and Sell and make quick money.
The issue here is people donât approach it as bussiness. Secondly oversimplification plays insane mind games. When you click buy button or sell button on the backend you are making a contract with other side. Your broker does that based on POA you gave in the market with other side. And you have to honor it. All of it oversimplified , however after enough education people get disassociated altogether and replace it gambling machines in their heads
I donât think we should put regulations or judge their capacity. Rather the issue is unlike real estate where you have documents or something infront, you have nothing.
Itâs best people first go to a court , swear an oath, let it be read thoroughly before opening f&O segment to let them know this is serious bussiness. Right now opening demat has been so paperless and easy , everyone gotten thinking around F &O is gambling station. I know people donât read disclaimer at all, seriously who reads. You wouldnât find drunkard reading âdrinking is injurious to healthâ.
Second regulation, I would suggest is if someone has lost of money , maybe make them go to court , swear an oath that they lost money after initial stage and they are aware they are again trading. Have other people have checks on you. Not ban people outright but it is to make people psychologically aware, because most of time when people lose 20 to 30% of capital, if they stopped that should have saved them. The issue is they press on. Or maybe have a regulation to direct them to take break but not outright ban or create barrier.
Thirdly I would say one thing though, every profitable trader even including investor once lost money only thing is lose less. Maybe tell them to have a small account and ask them to reach 9%. Even if they lose money itâs good because they need to get used to overcoming emotions such as revenge trading , chasing losses, over leveraging, gambling etc. Psychology from demoing to trading real money is way different, it is same even for investing.
This should help. Not ban or creat barrier entry but let them be aware of themselves of what they are doing stock market.
1 Like
(Note: The following comment contains what might initially appear as self-contradicting statements. However, they are so, as they are responding to 2 opposite views.
TL;DR: Irrespective of what oneâs opinion of the other players/actors (eg. the regulator) is, pick a dominant strategy and stick to it.)
Of course. Not at all blaming trading for it.
But, the increasing retail participation left unchecked is going to be another leaky bucket that drains the populace and enriches âthe fewâ.
One we can logically expect to be the next new dominant âleaky bucketâ as other prevalent âleaky bucketsâ are slowly being plugged-in.
To clarify this further,
the âdumb moneyâ is not just the 9/10 folks that the daily statutory warning reminds us of.
I genuinely belive that both you and me, we are âdumb moneyâ too. 
More sophisticated, but nevertheless âdumb moneyâ still the same.
So whatâs the âwinning moveâ ? Is there even one?..
Sure. but no matter what, by definition,
a secondary activity cannot be valued more than the value of the underlying âprimaryâ, right? The activities of trading in derivatives of a commodity cannot be valued more than the production-distribution-consumption of the underlying commodity itself.
IMHO, the financial sector has an overvalued opinion of their contribution.
And that is ripe for a âcorrectionâ.
- especially due to an over-supply,
- But mostly due to a world where the demand for financialization is reducing.
Note: This isnât a fact. Just an opinion based on what we observing around us.
I expect all this is likely to happen in due time.
However, it seems that the decision-makers are considering the current status as âcrisis-levelâ critical, and hence are taking relatively drastic measures, even if that results in major costs/risks including sudden shocks to a complex system, and a loss of trust in the system.
This reeks of entitlement.
Why build castles in the air. That too on someone elseâs platforms
(especially when one;s activity is not the primary value generation in the chain, remember?).
Why persist for the old and familiar. Why not adapt and move on?
âŚand if doing so, look for non-zero-sum pursuits, especially in some new âblue oceanâ.
Hard work? maybe. Smartly directed? Not so (in hindsight).
If you are a trader reading this,
hopefully you do not fall prey to the sunk cost fallacy,
end-up throwing good money after bad,
and lose out of the actual opportunities.
Looking around,. obviously not, right?
You cannot lobby the regulator. Smart money can.
You cannot create new/custom financial instruments. Smart money can.
Once you start to reliably carve out an edge, the rules of the game are changed.
Once you learnt to count-cards, you are no longer welcome to play at the casino.
Isnât this a natural symptom of -
a. Not being the primary in a value-chain.
b. Playing someone elseâs game in their backyard (the Smart Moneyâs).
One doesnât have to expect it, but it helps to be prepared to be commoditised.
The âbabyâ signed-up to play in this.
If one is significantly affected by this,
maybe think of oneself as the âdumb moneyâ who was caught unaware
due a lack of awareness on what one was signing-up for.
Of source, if you are reading this here,
you are likely more sophisticated than the âdumb moneyâ folks that are watching colorful graphs, hitting colorful buttons, and leaving colorful rage-filled comments on social-media.
But, maybe that just highlights that the âFirst they came for, and i did nothing. Then they came forâŚâ scenario is already a couple of iterations underway, and itâs now your turn?
PS: Rather than keep arguing about why this feels unjust, has anyone considered what opportunities are opening-up? Any half-thoughts on that? Or does everyone here consider such opportunities opening-up to be zero-sum games and doesnât make sense to discuss such stuff out in the open?
âŚor do you increasingly find yourselves in a strange game,
with the only winning move beingâŚ
1 Like
I wasnât. Not sure where you got that.
That was not the point.
The point of asking to evaluate the value-add of an activity
is so that one is well aware of it when one is overvalued
and plan to wean off of it as it wonât last long.
(sure, make money of such inefficiencies, but remember that the very act of doing so drives the system to correct and eliminate the inefficiency)
Hereâs a thought exercise -
- What is the value (in rupee terms) created by the above OTM contract?
(value that woudl not exist without this contract) - For whom?
- When?
- Is this OTM contract the âprimaryâ activity in its value-chain?
- or does it rely on there being another âprimaryâ activity?
one having a certain value, and this contract only helping retain/distribute that value?
- or does it rely on there being another âprimaryâ activity?
( Not rhetorical questions. Genuinely curious how folks model / think of this.)
The ones who did not have a contingency plan for this scenario
and hence are going to be significantly impacted,
are by definition âdumb moneyâ, yes.
(though typically the term is reserved for retail/indiviuals that are expected to be caught unawares and end-up on the losing side of âbetsâ in the market more often than not.)
Long-story short -
Certain activities are being disincentivized
as their value-add doesnât exist in the current system (even if it previously did),
or might even be of negative-value considering the externalities involved.
Dumb No. Small yes.
I think reason we get edges is because large money seems to have an aggregate pattern of behavior and small money can be nimble enough to get in between. Or to give liquidity to people at periods of high demand. etc etc
Simple things but they work well. There are lots of uncertainties in trading and things can shift and we need to adapt - but - I am happy with it. I will just keep compounding and diversifying.
Its winning enough for me. Next up this year is overnight and investing type systems whenever i stop being lazy. Lets see âŚ
Yeah. People have gone crazy with risk. Crypto/NFT/memecoins nonsense, sme chasing, smallcaps chasing. Tech has had huge growth too in US and that may have increased risk appetite. Fact that we bounced so quickly of covid also seems to have fed into this. Dunno.
Regulators in India have made some effort to reduce such things but people always find new things.
Anyway, i think active trading makes up most of the volumes generally if things are not distorted.
STT is ~10x with overnight equity vs futures and even lower in options. This matters too, and has an extra impact on market makers. They will need their margins too and so impact cost increases further. Stock market in cash lacks depth, and this might be one contributing factor.
Govt itself directs people through its actions to some extent.
Hopefully you do not assume that all traders dont make money ?
Trading has not gone away.
What feels unjust ? Nothing has been changed so far, and if they bring in an exam, it should have no impact for long term traders beyond some inconvenience. Rest have come and gone, and we need to adapt. Only a few things affected me luckily. Another friend was affected more as he trades options but he is doing fine too.
What opportunity ? Start training people, na out of my interest/expertise.
If they go away, trading will go away and market gets inefficient again. It might be cyclical, its very much cyclical in short term as we get good phases and drawdowns in trading. That is why we have some uncertainty and we get paid for handling it.
I have systems that are working for almost 15 years, over all of my data basically, 5+ tested live. They change and shift and i adapted as needed but basic stuff works. One day it will end, so diversify and manage risk.
Anyway, enough writing from me for now.
Maybe a good read
1 Like
So would the proposed regulations curb some (a lot?) of the speculation?
Does it requie the volume of partitcipation in derivatives ?
Especially the kind that is speculating even in derivatives,
i.e. adding more noise
and increasing volatility
rather than proper price discovery?
The kind of examples described above,
do you see such value-add (or even the potential for)
in any of the activities being disincentivised by the proposed regulations?
I donât see. If you do, please do share howâŚ
In India, retailers are not permitted to trade in currency derivatives. Is there stability to enter the market as a retailer in currency derivatives? @ST_Trading
May be you can file a writ petition. 
somebody here mentioned you can. I do not know.
You keep asking the same questions. No they dont cure cancer or bring world peace 
- They provide liquidity for hedgers.
- They provide more options (the english word), by allowing for bets to be placed on the long, short, and also the non-directional side.
- They generate revenue for the government.
- They facilitate the broking industry
- They subsidize brokerage costs for Investors.
I am a full time trader since the past 2 years. For me personally
- They give my Investment portfolio, stability/extra income.
- They let me give more time to family.
- They help me devote time for hobbies
- They help me keep my wife happy.
- They help me give more time to my kids, instead of running the corp rat raceâŚ
- They help me do regular charity. I know I am lucky and do this as a give-back.
@cvs Tell us about you - do you trade? Is the stock market a side gig for you 
1 Like
Because the same old tropes keep coming-up again and again.
Also, i find it extremely frustrating to see some of the low-quality drive-by comments full of hyperbole and sarcasm that prevent a productive conversation. I am referring to what you rightly called out as âposting rubbishâ earlier in this topic thread.
Exactly. So let us not kid ourselves that these activities are something to be cherished and preserved and encouraged forever and ever. (and to be clear, am not saying that you specifically said this. My comments are in response to the entitledness to the status-quo in some of the other comments.)
If there are alternatives, they will be pursued.
If someone had bet their livelihood on it,
and they are not in the majority (i.e. unlikely to be given any special consideration in any broad policy)
chances are they will face a hard time, unless they can adapt quickly enough.
Very good points.
Now anyone reading this, please consider
- whether there is plenty of supply of these âvalue-additionsâ
- whether there are cheaper alternatives to fulfil some/all of these âvalue-additionsâ
âŚand that will help one arrive at a more accurate understanding/expectation
of why these are being disincentivised / other activities incentivised.
Note: For anyone else reading this, when you read âdisincentivisedâ, donât think âbanâ. Think âcostlierâ instead. Thatâs what it means.
@VijayNair
regarding the rest of the post,
glad to know that you have done well so far.
However, since the general consensus is that the overwhelming majority of folks engaged in these activities, do not share a similar experience as you currently do, i expect you will be forced to endure the regulations that are applied to the majority, even though some of them may not be necessary in your specific individual case.
That is until you can distinguish yourself from the rest.
(which i think the regulations already allow, and i expect will do in a better more formal manner in the future)
PS: Based on the earlier comments in this thread, i suspect you have arrived at the same conclusion already and are well prepared for the upcoming changes. 
1 Like