New Comments by Sebi Chief

General
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From the Article

'Sebi chairperson Madhabi Puri Buch on Friday said the capital markets regulator is “compelled” to warn against speculative bets in the futures and options (F&O) segment because it has become a “macro issue”, affecting the broader economy now. Household financial savings are going into the speculative bets, belying the expectations of being used for capital formation

“…it has gone from being a micro issue of an investor to a macro issue of the economy itself. And therefore, we felt compelled,” Buch said, speaking at a SBI MF event.’

End Of Quote

I really feel that India is doomed with overzealous people. SEBI’ s own 2023 report says that there are about 45 lakh individual traders in India. Even if someone traded once for 100 rs they would be counted here.

So 45 lakh traders in a country of 130 crore+. That’s 0.3%. Even if that number has become 90 lakh now, it’s still 0.6%. The number of active traders will be much much lower but let’s leave that for a moment.

0.3%-0.6% people are apparently responsible for all the issues you can find in the economy.

Later in the article she says that data is everything. They will follow the data. Can someone bring this data to her notice. @nithin Banks FDs might have dried up because there has been big shift to mutual funds. We have had persistent inflation and lower wage growth of the bottom 50%. But no, 30-40 lakh traders are cause of the issue in a country of 130 crore+.

This is all getting into overzealous and scary territory. There should be a limit to how much you can babysit people. Next, the government will want to make laws about when I should sleep and wake up so as to have an ideal life. Just stop.

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True, but when you think about it, perhaps its more like 0.3% of families, not just individuals.

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The 2023 SEBI report specifically refers to individual traders only. And can 0.3% make such a big difference. Isn’t it much more likely that inflation and low wage growth are a much larger factor. It has been pointed out several times that the wage growth of the bottom 50% has been going down while the top few percent keep going up. Expensive Cars are selling like hot cakes while at the same time there’s no real wage growth at the bottom.

And those who are gambling in fno, they will find a venue in dream11 and online poker. SEBI will kill a regulated industry and send people to unregulated and riskier places and their wisdom is founded in 0.3% people depleting household savings.

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Yes. But often the trader is a bread winner or one of the important decision makers of the family…that’s what I meant.

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Woman are over protective unnecessarily.

And here is not welcome sign.

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Everyone now want to become hero by creating disaster which is not there :sweat_smile::sweat_smile:.

If i make profit in fno and invest it in stocks or mutual funds isnt it a capital formation .

Goverment get taxes through fno and use it for infrastructure isnt it capital formation?

@nithin if you can help what is the meaning of capital formation it will help us to understand .

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Essentially anything which adds to the net productivity of the nation.

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Okay, so the regulator is more concerned about the misallocation of resources and excess speculation. They want it to be moderate.

But out of, say, 10 crore demat accounts, 45 lakh are involved in F&O trading, which is 4.5%. How is that too high?

Eighty percent of turnover is generated by 20% of clients, which is approximately 9 lakh. So how is it unproductive or a waste of the country’s time?

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My guess is that retail customers lose close to 10 billion dollars (~85,000 crores) every year. That is a large number for a poor country like India, and it has gone up at least threefold in the last four years.

But that said, your venue will change if there is an inherent demand to speculate. So Crypto, CFD, etc.

Yeah, so it is tricky.

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It’s just a trigger point for big market correction nothing else so that big guns can re enter and create positions :joy::joy: if regulators are 1 prcnt serious about protecting retailers they should first and foremost stop daily expiries which I’m sure they won’t coz it impacts their revenues

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Why is Regularor not considering an awareness campaign like “Mutual fund sahi hai” which did wonders for SIP?
Just showing a warning when login is not working is like a cancer label on cigarette packets because everyone thinks they are different and can do it differently.

If regulators assumption are not producing the desired return in a given environment, it suggests their assumptions is not close to the truth. .

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Hmm, this is what is generating money for me now, if they decide to put an end to it then :frowning:

But seriously how will it matter? if you remove 0DTE, they will trade other weekly. If weeklies are removed, then move to monthly. If the whole fno is banned, then move to equity intraday

Till what level will you control?

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My 2 cents daily expiries create volatility and volatility creates dopamine effect which is the cause of this mess… as this gives the fake sense of accomplishment that yes I can be a millionaire if I keep doing this for next 1 year😂 in reality trading and investing are exactly the same I feel u take small small sensible steps on daily basis and build wealth over the period of 5-10 years … which people addicted to daily expiry don’t understand

Ps: I’m a trader for last 3 years lost a lot of money made a lot of money in fno :joy: so knows thing a two about how all this effects the psychology

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How is it not obvious at this point what they are trying to do. They have seen the rise in FnO volumes and just want to increase their share of the pie. All this drama is to finally increase the taxes and hence their revenue. All will become crystal clear on 23 July.

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after reading all of the comments, I feel what Nithin says about losing close to 85,000 cr could be the reason for the regulator to rethink of this aspect.
My query is if 85,000 crore is lost in a year, does this have a systemic risk on Banks or other Institution where the common man who has nothing to do with trading get affected or is it just that the people who trade could lose their money. If this is true, SEBI should not get involved as these traders are taking a informed decision based on their income. If they go bankrupt so be it if they make money it is great.
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Is it that these traders who lose money will eventually become a burden for the Government. But in India we do not have any scheme where the government supports. Not sure what is making the regulator curb this activity.
Reminds me of the AT1 Bonds of Banks, no one knew the risk until the yes bank crisis, where the entire AT1 Bonds got written off. Maybe there is something more sinister than people just losing money. @Akash_Shah

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Ours will never be a free market of the United States . There is regulation on regulation pushing everyone to the defensive side . There is lack of educating investors and retailers with regards to the change in regulations. Heck, not even stock broker’s customer support doesn’t understand much about a portion of regulation. I must say that one had to continuously educate themselves with changing regulations and market conditions.

With all of this, the brokers push towards MFDs, and advisors had become even higher these days as the base investor does not understand a lot of depth about the regulations before they invest .

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i think Sebi and RBI short nifty heavily - they are working hard to bring nitfty down , but FOMO play for these guys heavily- they dont know what they want to do

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Lets not get carried away with conspiracy theories.

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Ah, the delightful dance of financial regulation! :performing_arts: It’s like watching a troupe of well-dressed bureaucrats pirouette around the real issues while the market sharks continue their underwater tango. :shark::dancer:

So, let’s break this down, shall we? SEBI Chairperson Madhabi Puri Buch has sounded the alarm about speculative bets in the futures and options (F&O) segment. Apparently, it’s become a “macro issue” now, like a Godzilla-sized problem stomping through the economy. :globe_with_meridians::chart_with_downwards_trend:

But wait, what’s that? Household savings are being diverted from capital formation to these speculative F&O bets? Oh, the irony! It’s like saving up for a house but deciding to blow it all on lottery tickets instead. :house::ticket:

And here’s the pièce de résistance: young investors losing money in this high-stakes casino. Who could have foreseen that? Certainly not the seasoned financial wizards who designed this system! :slot_machine::man_shrugging:

But fear not, my dear retail traders! The solution is clear: STT (Securities Transaction Tax). Let’s crank it up to 11! Or maybe 44! Heck, why not 88! :chart_with_upwards_trend::money_with_wings:

Step 1: Increase STT to the tune of 4x to 8x on trade turnovers above 1000 crores. Because nothing says “let’s tame the sharks” like making them pay more for their fin-flipping frenzy. :shark::mag:

Step 2: Give all that STT as a rebate against total taxable income. Genius! It’s like saying, “Hey, Mr. Shark, we’ll tax your chomps, but don’t worry, you can deduct it from your annual feast.” :plate_with_cutlery::bar_chart:

Step 3: Zero STT for trade turnovers below 10 crores. Because small fish deserve a break, right? Let’s call it the “Goldfish Tax Exemption.” :tropical_fish::free:

Step 4: Weekly expiries? Pfft, passé! Let’s keep 'em rolling. Daily expiries, hourly expiries, heck, let’s have “nano-second” expiries! Blink, and your options are gone. Blink again, and you’re bankrupt. Blink thrice, and you’re a quantum millionaire. :mantelpiece_clock::moneybag:

Step 5: More indices! Because nothing says “diversification” like having a bajillion indices to choose from. “Today, I’m feeling bullish on the ‘Unicorn Rainbow Index’!” :rainbow::unicorn:

Step 6: Simplify IT slabs. Forget those Byzantine tax codes. Let’s make it as straightforward as a toddler’s coloring book. “Color within the lines, and you get a tax break!” :crayon::memo:

Step 7: Bring agricultural income into the tax net. Because farmers need to pay their fair share too. “Harvest season? More like ‘Tax Harvest’ season!” :ear_of_rice::moneybag:

And finally, if any of this damages the existing ecosystem, well, tough luck! The government’s got its boots on, ready to give that ecosystem a swift kick. :hiking_boot::herb:

So there you have it, my friends. The grand solution to all our problems. Now, if you’ll excuse me, I’m off to invest in the “Sarcastic Hedge Fund.” Returns guaranteed to be eye-rolling! :roll_eyes::chart_with_upwards_trend:

Sources:

  1. Times of India ²
  2. Devdiscourse ⁴

Remember, my dear investors, when life gives you lemons, trade them for options! :lemon::chart_with_downwards_trend::chart_with_upwards_trend:

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