For those of you refuting that volumes aren’t going down, here is an image suggesting otherwise.
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There has been like a 30% decline in volumes from what I have read from news sources but that is obviously not ‘significant’ according to Zerodha. Blind devotion to SEBI is really strong with them.
While that’s what most retailers want, Sebi ain’t gonna do that. They have never stepped back on their decision. A tyrant is what they are and they don’t really shy away from acting as one. We retailers are merely ants, lacking any voice whatsoever. Unless we stand united and oppose, there’s no way we can topple these draconian rules. The sad thing is that brokers aren’t even taking our side. They just wanna bootlick authority. But whatever. Dogs are dogs and they shall remain so forever.
Open account with finvasia zero brokerage. When brokers do not get brokerage then they understand
For november that is last expiry but for december it is first week, normally last week will have higher volumes, you can compare last week of expiry in december. My point is there is no significant change as of now but for sure it will be after sep 2021.
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Hmm… news from where? This is from NSE website
Check the turnover difference between November and December. Tell me where you see a dip of 30%?
Equity
F&O
Click here to see the report. January shows less because we are just 3 days into the month.
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I believe Impact will get visible only from March, at the current leverage level, restriction is not significant given the largest broker Zerodha and next 2 brokers were already very close to Dec limits.
We might see option volume drop, as intraday writing becomes bit more limited, option price might go up ( my estimate is about 20% increase in price) which might push some buyers out…
lets see what happens in march, whether it pushes us further into longer contracts.
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We must consider average daily turnover (dividing the whole month turnover by number of trading days) to see the clear picture.
Nov contracts had much lesser trading days with 26 nov expiry & two effective holidays Nov 5 & 19.
December contract has much higher trading days, with unusually longer 31st expiry with no holiday (even 25 th dec on Saturday).
Now just see the Index future turnover nov vs dec! 82 to 69 even after so extra trading days in dec contracts!
Just calculate average daily turnover on index & stock future - specially in index future( popular nifty & bank nifty segment where most small traders trades using higher intraday leverages).
There is big significant drop in index future daily average turnover future nov vs dec.
Also, to see the clear picture,
for option we must consider actual traded ‘premium turnover’ only.
“Notional Turnover” of option give us wrong impression when mix up with actual future turnover.
In my opinion:
Small traders mostly trade with index future where intraday leverage is maximum, so the effect will be maximum in index future segment. Stock future is next.
I don’t see much negative effect in option premium turnover, as some of future trader will definitely shift to option segment.
With high intraday margin, slowly option writers will also demand higher premium. So option turnover will rise ultimately due to high volume + high premium.
But, higher volume in option + lower volume in future can increase more volatility to market.
Below is the quarter when we can see the start of significant change in volume.
• 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)
Situation may be worse September onwards.
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Thanks Bro. Very well explained
But sad part is there is very less change in turnover & Contracts traded means either exchange or government not loosing revenue ( I think Broker also will not loose revenue)
But retail traders who shift to options from futures makes trading as more gamble business
As per statistics option buyers loose more money then future traders so retail traders will loose more money and makes trading as more gamble business like casino
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Even you take out a day or two there is no drop in volumes in december, we are not saying there won’t be any drop in future, just giving out facts what happened in december.
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You don’t read my full post, there is already significant drop in volumes in Index future.
See Nithin’s screenshot carefully.
Just from Nithin’s screenshot:-
Dec-2020 no of contract/volume 7989064 & Turnover 691462.65 Cr in 23 trading days vs
Nov-2020 no of contract/volume 10516563 & Turnover 8263340.63 in 20 trading days!
Average daily turnover in Index Future Segment :
Dec-20 = 691462.65/23=30063.593
Nov-20 = 826340.63/20=41317.031
(30063.593/41317.031)*100=72.76
So, dec-20 average daily traded volume of index future reduce to (100-72.76)= 27.24%.
27.24% is significant decrease!
Some report roughly mention above number as approximately 30% drop.
Here is the calculation behind such report, they are talking about Index Future(Nifty & Bank Nifty).
Just from Nithin’s screenshot:-
Dec-2020 no of contract/volume 7989064 & Turnover 691462.65 Cr in 23 trading days vs
Nov-2020 no of contract/volume 10516563 & Turnover 8263340.63 in 20 trading days!
Average daily turnover in Index Future Segment :
Dec-20 = 691462.65/23=30063.593
Nov-20 = 826340.63/20=41317.031
(30063.593/41317.031)*100=72.76
So, dec-20 average daily traded volume of index future reduce to (100-72.76)= 27.24%.
27.24% is significant decrease!
Some report roughly mention above number as approximately 30% drop.
Then you can see apr,may,june,july,sep and all these months has higher than november, so why that happened? we all know markets generally has almost doubled from march and so the margins.
My post is related to Nithin’s post where he failed to understand why some report mentioned the 30% drop nov vs dec.
I don’t need to see apr, may, june data because it is clearly out of context here. You 'll see clear picture in September 21. No need to waste time now.
Next time before reply, read full post carefully to avoid unnecessary argument.
This is my last post about the topic.
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Hey, that image I shared is of premium turnover.
December (extending to early Jan) historically is usually the lowest volume month in the year with holidays and all. So historically a 20 day Nov would have a greater volume than 23 days December. You can pull up the historical archives to check on this.
As a person running this business, I am worried about the potential drop in revenue in the future. There is no doubt that it will drop as the leverages get tighter. But what I was trying to explain was that it hasn’t dropped as of now. I speak to the exchange officials on almost a daily basis, and they are also surprised with it. I am guessing it is because of increased participation this year.
Cheers,
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@siva can zerodha adjust its ‘exit’ mode in positions list to 1st exit short legs and then the longs? If i just click select all and exit, still i get the margin call.
Instead of this current behavior, once the ‘exit’ is hit, the orders can be locked internally, post the market orders of short-legs. Then post the market orders of long-legs.
It takes time to recognize and register in mid which of the strikes to exit, check that individual check box, then SCROLL-DOWN every time for the exit button.
I know ‘no’ is a standard reply from you guys. Am posting it as I have some time to type it out.
Not possible but one can create basket with all positions and add shorts first and exit all at one click.
If you were really that worried, you would really do something about it. The hope that Zerodha at least would take retailers’ side is part of the reason why some people stick with Zerodha. It’s called ‘trust’. That’s why people are more willing to pay to your business rather than others because you as a personality seems trustworthy. Being the biggest broker in India, you have the ability to defend the retail community from any form of hindrances so that through your platform, they can achieve financial freedom and create immense wealth for themselves. And others and I trusted in that. But really. Ask yourself. Have you lived up to that trust?
I still remember what you said in one of your interviews. That building a business that instead of merely ‘serving’ actually ‘helps’ its clients is truly special. That was impactful but it seems like you are backstepping on that ambition. Is it because you believe authority is absolute just like many others falsely believe? How can one entity and its decision be entirely right and that of the people be entirely wrong? These are things one needs to ponder upon and being you who is a high profile figure having the ability to mend things for the greater good needs to ponder even more so.
Plz do reply to this.
And what makes you feel that I wouldn’t have tried my best. We are the largest retail brokerage in the country, we rely on intraday traders for our revenue, if intraday trading volumes reduce we get affected more than anyone else in this country, why do you think we wouldn’t have tried? There were mistakes done by the industry and the regulator like any other regulator is putting rules to fix it. If the mistakes weren’t done, these regulations wouldn’t have been applied. Since the mistakes done by a few brokers has negatively impacted the broking industry so much, there is no way the regulator was ready to budge on this one.
But yeah, my response was because someone had posted saying trading volumes are down. They are not down currently. But I am sure they are going to be down significantly by Sep 2021.
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