Sir, as of now for retailers like me, You are the only hope, Please mention this point in the meeting that if they are allowing continuely atleast min 25% of Span + Exposure as they are going to allow after Dec, this will also fine but please let them think about retailer who don’t have much bigger capital,
For your information, I’m actually struggling from last 4 years with 100% of my efforts just to learn every single point, now at this time I improved myself much and trading slowly because I have below 1 Lac capital,
After this decision if I will not be able to trade because I don’t have capital then what’s the use of my last 4 years ( You can’t even think, How much up downs are there including losses ), Then what should I do, Regular 9-5 Job, Then what about the dream for which I spent my day night before…
This decision doesn’t matter to Rich People as they don’t care about margin, It’s only going to matter the people like me, in Short what SEBI wants to prove here, Rich becomes Rich & Poor must stay Poor or Do Suicide because we don’t have any Godfather…
And after reading this, if SEBI is still with their decision then Please tell them to remove I from SEBI Securities and Exchange board of India
Because a true Indian always think about middle class first that rich people’s… & This is not " मेरा भारत महान "…
and yet SEBI went ahead and did it anyway.
How do you think they can get away with this, if unconstitutional?
Emotions don’t play any role in reviewing/changing such regulatory decisions. There are many people like you who will suffer but that is not how we should object this decision by SEBI.
You have to present logical points instead of a personal emo story like:
- Not allowing brokers to fund their clients margin and therefore denying the right to implement varied business models to run their business.
- Loss in txn volume since retailers will be thrown out
- Finding some common ground where brokers don’t indulge in providing too much margin that they can’t afford
@nithin Do you feel this can be a very strong point of contention to make SEBI reconsider/modify this decision?
Brother, I totally agree with your points but I didn’t wrote only emotional thing here I also mentioned a logical point about continuely allowing minimum 25% of SPAN + EXPOSURE, which as of now many brokers going beyond that limit around 4-5%.
So I’m only saying is atleast 25% is also Ok Because in this no any signal trader ( I guarantee ) will face extreme loss or account blown up thing in intraday
Let me explain as of now for Banknifty Future 1 Lot Toal margin required is 1,20,000 ₹,
And 25% is 30,000
So in 30k we are trading Banknifty Future for Intraday, Now anyone here told me to totally lose 30k we need 1500 points move
1500 points move in single day is highly impossible except the Budget day or Recent Corona Virus Days or Election Day ( And on this High Volatile Days, they already blocked the margin )
So no point here anyone can loose whole capital or extreme loss because the 25% Margin is enough to handle every situation, That’s my Point…
& @nithin Sir please read my previous msg please if you didn’t read…
In a regulated business - broking, banking, Mutual funds, etc, there are rules made to protect the overall interest of the markets. These rules apply to every participant. There is nothing unconstitutional about it, as long as the rule has to be followed by everyone and not selectively.
The only real request to SEBI was that taking this leverage away will mean lower liquidity and higher impact costs in the market. Potentially some retail customers might seek other illegal avenues to get that high leverage (binary options, CFD platforms, Dabba trading), etc. As long as brokers are ready to put their money to take the risk, we should maybe continue with some upper cap on leverage. But, I guess they have compared to other markets and thought that the leverages that SPAN+Exposure or VAR+ELM offers is good enough.
Are there are any chances of this happening? I’d say very very thin. The reason being for most brokerage firms who charge a % brokerage, offering higher leverage means more revenue. So the regulator is bound to think that brokers will compromise on risk for revenue, like in some of the cases of brokerage firms going bust.
I agree.
But this would mean so many brokers will have to shut their businesses which were based on high brokerage and high leverage model.
Secondly, this makes the market inaccessible to new traders. How is this good for the Indian market where they are trying to simulate the trading conditions of other mature markets.
This(no new traders + no small/new brokers) actually kills the market.
So the upper cap on leverage is the way to salvage the retail traders’ volume as well as curb very high leverage offering practices. It must happen
No sir! Regulations need to adher to some fundamental principles and logic and rationale.
For eg. Govt can cap the interest rates on loans but cannot dictate minimum rates.
Conversely it can fix min rates of real estate (circle rates) but cannot dictate max price.
Govt has tried this in many instances and trashed by courts later.
I hope this does not happen. This is just another way of asking more leverage which SEBI is trying to curtail. If allowed, tt is the beginning of a systemic risk point forming. You have explained the same very well in different posts.
If a broker is allowed to let clients take leverage on brokers funds, what does that mean? It is just a loan. An unsecured and probably an illegal one; because how could an exchange or SEBI let themselves into dictating loan regulations?
If I understand correctly, exchanges dont deal too much with individual traders (seems to be changing very very slowly). Margins were and still is and will be applied at broker level. Just that SEBI comes now and says “brokers have to obey rules and be true to what they say about client margins”. How could one oppose that?
I believe, once these new rules are in place, RBI will step in and put more rules about financing. May be they will revisit NBFC licenses and practices.
~~
Doesn’t this answer your question also?
In a regulated business - broking, banking, Mutual funds, etc, there are rules made to protect the overall interest of the markets. These rules apply to every participant. There is nothing unconstitutional about it, as long as the rule has to be followed by everyone and not selectively.
The only real request to SEBI was that taking this leverage away will mean lower liquidity and higher impact costs in the market. Potentially some retail customers might seek other illegal avenues to get that high leverage (binary options, CFD platforms, Dabba trading), etc. As long as brokers are ready to put their money to take the risk, we should maybe continue with some upper cap on leverage. But, I guess they have compared to other markets and thought that the leverages that SPAN+Exposure or VAR+ELM offers is good enough.
Are there are any chances of this happening? I’d say very very thin. The reason being for most brokerage firms who charge a % brokerage, offering higher leverage means more revenue. So the regulator is bound to think that brokers will compromise on risk for revenue, like in some of the cases of brokerage firms going bust.
atleast offer 25% of span +exposure… you seem happy about this move , us small traders earning 1000 a day will go bankrupt… please lobby with sebi to offer atleast some leverage…
Ok Let’s see, waisebhi
Ummed pe duniya kayam hai…
Why cant a broker use his own capital for providing leverage. Since it is between the broker and the trader what happens at this end it is really unfair that this is not allowed. It is possible that this could be raised to the SEBI again.
Secondly, if their have been malpractices why hamper an entire community because of malpractices of a few.
Thirdly, this will be very unfavourable for the retail investor since option writing/selling will require huge margin. Unfortunately people may be pushed to option buy or other strategies or risking positional trades and playing into the hands of stock market big guns.
Instead of safeguarding the interests of the retail investors don’t you think SEBI is putting them at a high risk because they will use a big capital to take a position and may loose all.
Request you as the leading and top brokerage firm to take the issues, concerns of the retail investors to SEBI and find a solution for them 
Thanks in Advance.
So basically there will be nothing like intraday in Options Selling/Writing or Buying since the amount to be paid upfront will be full. It will be like a normal position. Is there any way around this for retail traders ?
Yes.
There is no workaround to this.
India is the only country in the world where initial margin charged in the F&O segment consists of three margins. All other countries charge only SPAN margin
Is there absolutely any ray of hope , with talks and tone of SEBI ? @nithin @siva
That we may be able to get leverage Intraday for Index Option Selling.
Their intention is originally towards Cash segment.
- Maybe Peak Margin reporting would be needed for Var+ELM only , only for Cash Segment. Not for FnO.
Are Brokers /Trader/ representations completely powerless in front of SEBI.
What is the appeal being planned by Brokers against this.
Are propsals being presented to them :
- Declaring trades MIS upfront , MIS risk calculation would be different from Overnight risk calculated in Var+ELM or Span+Exposure.
- Using Brokerlevel CoverOrder/StopLoss Order setups / Money assurance by Broker
- Broker Assurance that its not another Clients fund
- …
Can we have any positive news in this / any hope ?
I am against Over-Leveraging and against Under-Leveraging , I determine the PositionSize as per my Drawdown tolerance and MoneyNeeded to take trade.
@zerodha might be at a disadvantage if traders start using Far-OTM hedge as an alternate to Naked selling to reduce margin , considering they are blocked in Zerodha (being largest broker).
To all those who are having panic attack due to this issue as very livelihood is in question, I know, that you are desperately searching for some way forward.
I suggest you sit on “Amaran Uposhan” infront of SEBI office.
I most graciously am ready to fund it. I will pay for pandaal, Bichhayat, Sound system, Posters, Banners etc .
In return you will be required to “share your trading strategy”
If your strategy is so secret that only nuclear codes of US are more secret than this, then you should rather sell it to some hedge fund for millions and retire early.
Kaiko iss SEBI-Bebi ke zamele mein padna.