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 âpremium turnoverâ only.
âNotional Turnoverâ of option give us wrong impression when mix up with actual future turnover.
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 donât 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)
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
Even you take out a day or two there is no drop in volumes in december, we are not saying there wonât be any drop in future, just giving out facts what happened in december.
You donât read my full post, there is already significant drop in volumes in Index future.
See Nithinâs screenshot carefully.
Just from Nithinâs 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 Nithinâs 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 Nithinâs post where he failed to understand why some report mentioned the 30% drop nov vs dec.
I donât 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.
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 hasnât 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.
@siva can zerodha adjust its âexitâ 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 âexitâ 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 ânoâ is a standard reply from you guys. Am posting it as I have some time to type it out.
If you were really that worried, you would really do something about it. The hope that Zerodha at least would take retailersâ side is part of the reason why some people stick with Zerodha. Itâs called âtrustâ. Thatâs 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 âservingâ actually âhelpsâ 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 wouldnât 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 wouldnât 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 werenât done, these regulations wouldnât 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.
That was a little Harsh! The way you have typed sounded as if you want Zerodha and Nithin should go to war with SEBI. Going on an all out war against a powerful regulator is asking for Trouble. Even Elon Musk learned it the the hard way in US. In US two institutions that you donât really mess with IRS and SEC. In India it is SEBI and NIA.
@nithin Sorry to hijack this conversation but I posted this in another thread which has been unlisted. PLEASE do something about the order flow in the snap quote window as it getâs stuck regularly since the past few days. The level 5 depth to be precise, sometimes thereâs huge volume like large buy/sells and the normal snap-quote remains stuck in the original state for quite sometime even after prices have moved substantially. My internet is fine BTW and interestingly the thing only happens when you already have an open position in that stock, I literally have other tabs open where this doesnât happen. Please do something about itâŚ
@DemonSlayer Can you message me your id when it happens next time, we can take access and check if it happens again or if possible you can record it and mail me @ [email protected]
Due to strike price restriction, I need to write the short option first before the long option as the long is outside the range. Due to MIS currently I am able to make it happen in a few orders which would not be possible once intraday leverage is gone. Also due to strike price restriction, if I have to move a hedge I have to close existing hedge (which increases margin to overlimit) and then only buy new hedge. For now it is ok due to MIS.
Can zerodha come up with a solution for this ? Maybe a basket order so long and short place concurrently with the hedged margins?
Also can strike price restriction be removed for large accounts that use long options only for hedging? Would make it easier to move hedges and buy options first and then sell with lowered margin.
We all know that SEBIâs solution to the problem is not an efficient one. It has several unwanted side efftects such as dipping volumes, settlement delays, less leverage, risk of heavy penalties etc. Itâs creating more problems than solving one. Canât we just come up with a middle ground upon which SEBI can agree? The peak margin rule is being put in place so that the broker doesnât use other clientsâ funds to provide leverage to its clients. So, canât there be a system wherein the broker funds its clients using only his own money? As to this potential solution, I think that since peak margin reporting is already in place, the broker might as well report where and how much he has funded its clients by mentioning the details of such in the said reports. What do you think about that?
