No additional intraday leverages from Aug 2021 in Indian capital markets

Yes, BO and CO margins too will reduce and will be same as MIS.

For F&O post August 2021, there will be no leverage offered in either MIS, CO or BO, you will need full SPAN + Exposure margin.

They too will have to oblige with new rules, so they too won’t be able to offer any leverage.

hmm… are Indian regulators trying to mimic other much established world markets?
but, if they are trying, better do it in every aspect.
I don’t mind our margin/leverage (and much more) being exactly similar to how its in US.
when I say this, I strongly mean the MARGIN as how its collected in US, at least.

Thanks ShubhS9. This makes logical sense…
At the same time, like I said in previous post, I wish the margins for hedged positions are also reduced (to a maximum of maximum risk), like other markets.

Oh you wouldn’t want Sebi try to mimic the US market. They have an entry barrier of 25000$ just for trading. That is, you need maintain a minimum balance of 25000$ at all times if you want to trade. Covert that to INR and that is close to 20 lakhs rupees. Imagine how inaccessible the market would be to retail traders if that happened. Sebi could take the best of the other markets if they want to but hopefully avoid the restrictions they have over there.

@nithin, You said that “That intraday leverage that can be offered until Aug 2021 from Dec 2020 is only from brokers own capital. But post that, no.”
Does it means we will get current leverage (40% of SPAN+Exposure for MIS) until Aug 2021 in F&O?

You can read this post, as mentioned there, this is how margins will start increasing from December 1st.

Also, how much leverage can be offered has been mentioned as well.

  • Dec 2020 to Feb 2021 - penalty if margin blocked is less than 25% of VAR+ELM ( or 20% of trade value) for stocks or SPAN+Exposure for F&O. (Max leverage of 5% or 20 times for stocks)
  • Marc 2021 to May 2021 - penalty if margin blocked less than 50% of minimum margin required. (Max leverage of 10% or 10 times for stocks)
  • June 2021 to Aug 2021 - penalty if margin blocked less than 75% of minimum margin required. (Max leverage of 15% or around 7 times for stocks)
  • From Sept 2021 - penalty if margin blocked less than 100% of minimum margin required. (Max leverage of 20% or 5 times).

I wanna see how much tax revenue they will get after this is implemented. Liquidity will dive and daily trade numbers will also fall down heavily. I hope they regret the amount they lose in STT due to low number of trades.

Master plan by SEBI to fill the void to be created by removing leverage…

Nice… we can do our bit but once sebi has made its mind there’s hardly anything anyone can do about it.

What if they increase the STT ?

Discount brokers use to give leverage to traders using the money from two sources:

  1. Brokers take loan from bank, but its expensive for the brokers to take loan and pay interest for that and then give you traders leverage in that money.
  2. Most of the times, brokers choose in the capital of other customers that kept in their accounts and square off the clients position end of the day and get back the money that is lent to the traders and settle it.

But at times like Corona market fell so fast that the automatic systems could not square off the loss making positions of most clients and the capital of many clients went into Negative. So now brokers had tough time to recover this money from the clients that lost all their money and also the leverage money that they borrowed from the Discount broker.

Then the brokers claim bankruptcy and eventually the Govt of India has to bail them out.

Ultimately, the funds that kept in brokers account by investors will have to wait for the govt to bail out the broker.
And the tax payer has to bear the grunt of the entire non sense affair, who is innocent and not aware of all this at all.

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Can you name one broker who govt bailed out?

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I don’t heard anything like this. But one thing is great that now broker can’t use one client money to give to another. Right ?

There are brokers out there who give 20x 30x leverage.

Which is not good.

right… this is the main reason there is now cap on max leverage, it is less systematic risk… people will see it as inconvenient now but it is good for industry in long run…

Harshad Mehta :thinking: :grinning:

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I am planning to trade in currency market because of less capital. Please share me how much do I need money for an intraday trading and normal position from AUG 2021.

You can check margin requirement for Currency Derivatives here. From September 2021, margin requirement for intraday (MIS, CO) will be same as margin requirement for overnight positions (NRML).

Do you think indian stock market will exist after September as there will be no leverage as posted by wisdom capital they have shown 30% decline in volume in cash and fno market if we compare 1st week of December with last week of November as per my opinion I think nse bse and mcx will become like ncdex