Sebi on weekly options

@nithin
Yesterday, SEBI Chairperson said they will review weekly options if the committee recommends it.
Instead of educating and working on awareness for retail investors, is it better to close the entire product?

Why does SEBI want to babysit retail investors?
In any profession, there will be good and bad.

4 Likes

It’s literally their job.

Same people will take out their pitchforks when market crashes and “SEBI did not protect retailers”

2 Likes

Markets will crash anyway; the reason can differ, but that’s how markets work.
If there are accidents on the road, you should improve awareness and infrastructure rather than stopping people from going on the road.

2 Likes

If 90% of people get into accidents on the road despite a banner at the start saying 90% of drivers will not get through, then awareness is not the thing lacking.

Read the article, she is just stating that if a expert committee recommends something, SEBI will consider it.

Every government body will do the same. You want her to state that she will ignore a committee’s recommendations?

Driving requires a license, whereas trading has no entry barrier. Many products that are available in the US or European markets are not available here.
All trading should be banned, and retail trading should not be allowed. Only investment should be permitted, as the sucess ratio is more or less the same everywhere.

Speculators are an important part of the ecosystem; they take on the risk of hedgers.

I know a lot of people who burnt their fingers in futures trading even before weekly options, so in my limited understanding, removing weekly options will not do any better.

1 Like

I just want a discussion on this :sweat_smile: to understand the other side of the coin.

This is true and also SEBI is not providing fare play to the retail traders, and also SEBI probably Don’'t know how to regulate , instead they deny the opportunists, but its the Indian mentality to blame others for the part of their fault.

Majority of students dont get into IIT, IIM and success rate in neet exams is also similar so what do you suggest, and please don’t say they dnt loose money in preparation, the coaching fees, hostels, mental pressure are all there in those entrance tests also.

It is important not to compare the Indian market with the US market directly. In the US, trading terminals offer separate options for covered calls and naked calls. Covered calls are executed only if the trader holds the underlying asset, eliminating the need for maintaining a margin. However, in India, the concept of executing a covered call without margin does not exist. As a result, those executing covered calls must deploy approximately 15 lakhs per lot, including the cost of the underlying asset plus the margin. In my opinion, this serves as a direct discouragement for retail investors from engaging in covered calls.

1 Like

My point is, why go backward in the name of systematic risk? Already, the margin requirement is quite high in India as compared to others. Too much regulation is not good for the free market. Definitely, an awareness campaign is required; see the success of the MUTUAL FUND SAHI HAI campaign.

https://x.com/Nithin0dha/status/1806612207007834450

Sorry, had to share this here after I saw the above tweet:
IMG-20240628-WA0003

4 Likes

Intraday trading is already dead. If options also die, what will brokers do?:sweat_smile::sweat_smile::sweat_smile:

The problem isn’t what they are planning or saying now, it is the blatant and in your face whipsaw changes in regulatory approach. Just last year SEBI’s stance was this:

“India is not a nanny state….if somebody wants to trade in the F&O segment we don’t think we should stop them," (Link Below)

What happened to all that free market talk :slight_smile:

5 Likes

Sounds like the typical quote taken out of context in that article full of “sound-bites”.
I wish we had the transcript/recording of the entire session to better judge for ourselves.

In hindsight,
even the select quotes posted in the above article,
already hint towards the potential hand-holding regulations being discussed more recently.

THERE IS A SAYING:
PARENTS WHO DON’T HOLD THEIR KIDS’ HANDS WON’T BE ABLE TO WALK.
BUT PARENTS WHO DON’T LEAVE THEIR KIDS’ HANDS WON’T BE ABLE TO RUN THEIR ENTIRE LIVES.

Indian markets are now mature enough. They should create awareness like the “mutual fund sahi hai” campaign instead of blanket restrictions.

1 Like

See weekly options are indeed risky , no doubt, But the chunk of the revenue also comes from there.
Why SEBI has given permission for weekly options of MIDCAP , FINNIFTY , BANKEX , SENSEX
Why not start monthly options , if they do the markets won’t remain as juicy and exciting as it is now .
What they should do is promote long term options (monthly , quarterly , half yearly and yearly) . Though nifty is fairly liquid , i am talking about other indexes , that will much safer bet than weekly and daily

2 Likes

Going by the recent SEBI posturing, a ban on weekly options may be in the offing.

Most of the investors are losing money because of:

a) Sudden “induced” volatility
b) Marking of closing levels of Indices on expiry

The big Q is - what has been done on folks engaged in these two activities?

A monthly option will be a weekly option when it enters the last week prior expiry! So there would still be the very same volatility what SEBI is trying to avoid- but now once a month.

What we need an orderly functioning market where people who are not playing fair have some fear. Answer is not a blanket ban on products but instilling that fear!

BTW, did anyone speak of massively popular 0DTE options/ same day expiry contracts in the US? We need to ask ourselves - if those markets could manage- why not us?

It would be a regulatory failure to withdraw a product due to uncontained malpractices by a few players.

3 Likes

70% of startups fail within 5 years, government should put a ban on startups as well.

7 Likes

Simple thing SEBI can do to reduce the volatility is that to BAN the ALGO’s , but they don’t do it , even the brokers starts cry if SEBI do that :slightly_smiling_face: