Crushed Dreams of Retail Traders

You know what… this topic needs no introduction…

I am using my Article 19 rights here to express my views. What is written here is the truth at the time of posting.

Cash traders are sitting ducks to volatile moves… Those options traders who are risk averse trading use spreads… and are slapped with HUGE MARGIN COSTS that make life miserable…

When the max risk is 3k, you block 50-80k amount as margins… ? WTF… (just as an example I’m giving this…)

I watched Inside Job where a huge fleet of lawyers were hired by big corporations to “GET SHIT DONE”.

If I had 10 million, I would put 2 million to hire a fleet lawyers to sue SEBI and Exchanges for crushing dreams of retail traders… for so long… I would hire Subramaniam Swami, Kapil Sibal, Abhishek Manusinghwi…

This is totally unfair and against my right to Life (article 21) because my livelihood is threatened because of this attitude by SEBI and exchanges.

@nithin There is a LOT of jingoism here in the forums that Zerodha is born to help the retail traders… There may be some truth to it… I sincerely wish that you achieve more in the future…

How long will you fold hands before these people and always say “Yes sir… Yes sir…”

Do this and only then you will get my respect. This is the way to get the respect and LOYALTY of derivative traders…

The reason why I am asking you is because… I am a small fish…

Why cant you throw some crores at these big name lawyers… and atleast put some pressure… so that SEBI and Exchanges RESPECT you… I will personally give you 30k of my money if you give commitment…

You will get my respect only when you do this… Otherwise… who cares… there is no loyalty…

You wont become poor by hiring these lawyers… would you ? I dont think so… I will pray to God that you make 100 crores a year… But please do this to help retail traders.


My Man ! I fully understand your sentiment. But the system does not like small fishes. Just look how enthusiastic SEBI is in crushing us small people. But when big people are involved like in NSE co-location case, it sleeps sound.

Its principles itself is messed up. It claims to clamp down on speculation, but starts weekly option trading easily, which is a den for pure speculation. Hypocrisy ki bhi seema hoti hai ! It earns a lot from fines and taxes but does not want to spend on investor education. Also its rules are haphazardly formed, not scientific enough(small cap classification issue), and it has no proper long term direction/planning. I think there are a bunch of elite people mobbing SEBI and pulling its decision making process in different directions, for their own benefit. Who knows what the truth is !


This is already on its way, I don’t know if you have seen this news item

The broker forums have been fighting for this for a while, you might hear some good news around this in a couple of months. Margin for spreads is going to drop significantly.

The margin can’t drop to 3k just because the max risk is 3k because clients can potentially exit the long option leg first and bring in a lot of risk. It might drop from the current say 80k to around 20k.

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Yes there is an option, but what if the trader decides to exit the buy side first and ends up holding a position with unlimited risk with just 3k in the account? That is the reason in the first place the margin is as high as it is.

There are many things that can go wrong here during execution, and of course a huge liquidity risk especially with bigger traders.

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If a client were to default in the US to the broker to make good of any losses, the repercussions are severe, in India it isn’t. Hence brokers in the US can end up offering such products knowing that the client bad debit risk is much lesser.

In India, as you know, if there is a loophole, many will try to misuse it knowing the penalty is not steep. Rules are always made to cover the bad actors, but ends up affecting good ones as well.


Margin requirement is too high , but still … they don’t want small retailers to do this because most of them are noobs who lose money with whatever margins we give.

Maybe they can decrease margin requirements to 60 day challenge winner or something :stuck_out_tongue_winking_eye::wink:

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I personally feel large lot size and vanishing mini lots in MCX are issue. As a trader who is learning is should be able to play small during learning stage rather than force to full lot.

Here i have to sit on my hands for Short Equity Trade or Commodities just because for small risk size i have set for myself in learning stage i can’t afford a full lot.

Hence by forcing players to stay out instead forces them to loose big or not play at all.


Yeah, lose big or stay out totally or give your money to incompetent fund managers !
SEBI wants the stock market to be made up of few big players who will play the game with small people’s money. They wont even be liable for any probable losses. In the end it will become an elite club.

Instead of evolving towards a liberalised and free market, we are seeing more and more restrictions and that too unscientific ones. It is SEBI’s duty to keep the market free and promote fair price discovery and have proper infrastructure in place to root out any manipulations. If they cant do this, just stop the Stock Market !!!

I dont want to come too hard on SEBI because I like few of the measures put in place recently to ensure a clean market. Its just that the other actions of SEBI is a bit “undemocratic”. These guys (including this govt) are not professionals in their work, they are just thugs enforcing CHANGE thru the barrel of a gun.


It all boils down to the same thing… Rich regulators dont give a damn about retailers… Plus non stop lobbying by mutual funds managers… They do not want common people to finally make a living and be financially stable… And on the other hand we traders does not have any association to turn towards or sufficient capital to fight such blatant injustice by the regulators in the name of protecting the people…




@nithin The broker can simply check if the client has enough margin to hold a naked position, if not, the client will not be allowed to square off the leg meant for hedging, I think we have a something similar for squaring off positions even now, i.e. to check client margin and positions before letting him/her place a square off trade. for ex: if the margin is full, I am not allowed to place any trades, but if I already have a position on, I am allowed to place the reverse trade upto that qty, so the client portfolio is checked.

Currently, the RMS systems can’t track the margin by strategies, it does it by overall portfolio. It is on our list of things to build but will take time. There is another issue, when the leg which is futures or short options starts making losses, either the MTM losses have to be made good (futures) or the margin goes up (short options). The notional profit of long options can’t be used to adjust this. So the customer is required to fund the account for this or else the short margin penalties kick in. If the client doesn’t fund it and the position has to be exited, if one of the legs doesn’t have liquidity, it can be a disaster.

@nithin can you clarify on this? Will zerodha continue to provide intraday leverage post this?


Please do go through this forum. Your question have been repeatedly answered and explained and its pros and cons debated by various users. Please read this forum before asking the same question again. Thanks

I am sorry to inform you I have been updated with the forum. My question is about the moneycontrol article that came out YESTERDAY, which says SEBI is ok with brokers funding client trades with their own money. Since Zerodha has been doing the same since the beginning I believe the new update from SEBI should allow Zerodha to provide leverage like before. That’s why I posted the question to @nithin to clarify about the same.Thank you

For now, it is status quo. Broker forum and exchanges have to meet SEBI with some sort of proposal, it has to be then approved. All of this will take time. But yeah, if broker can fund using his own funds, whatever leverages we have historically offered will continue, we have always used our own capital for this.


Thank you so much for the clarification. I believe in you and zerodha team, I am sure you guys will help out small time traders like me in these tough times. All the best

Hello @NithinKamath . Will Zerodha provide the same leaverage as of now its offering for retailers and for others… or will it decrease the margin?