‘We, the People of India’, can go a long way without the big league. Lions do not do much in jungle except roaring their authority. Let all the governed get together without the kings.
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Not possible to dump SEBI. Currently it is all speculation based on media reports. Product suitability framework will be introduced for sure, but in what form needs to be seen. SEBI will put out a white paper asking for response before doing anything. In a country like India where agriculturalists don’t have to pay taxes, you can’t do it just basis income tax returns or networth.
I think what the article talks about in terms of equity exposure based on networth, that is probably an extreme case interpretation of the product suitability framework.
Exchanges, broker associations, and big brokers are all making representations on this. Btw Govt of India makes 8000+ crores in STT every year from stock exchanges.
I don’t think anything drastic will be done on equity exposure. But on derivatives, hmm… maybe something will happen. Is this good or bad, hmm… debatable. As a trader, of course I’d want everyone to trade derivatives. But as a broker who has seen many people trade these with no idea on how it works and lose life savings in a hurry due to the leverage it brings, I think it may not be such a bad thing. But maybe only if there was a easy way to short the markets (using SLB).
But yeah, on derivatives I am confused on what side should I incline - most of Zerodha’s revenue comes from derivatives (so mind says yes should be allowed), but interacting with so many of our clients who have lost money without knowing what derivatives are (heart says, maybe best if they are not allowed at all).
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@nithin One request ! If you have an opportunity to lobby at SEBI, please tell them to make NISM certification as eligibility criteria to trade derivatives. But networth criteria to trade derivatives is injustice for traders who are aware of risks. Of course those who lost their money will be more vocal than who lost only a part of it.
@Vandana1 It is not possible to bypass SEBI. Not at all. Forget the talk of another exchange. Not practical. Please discuss on lobbying this same old SEBI.
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@nithin i fully agree with the idea of making it mandatory to take the NISM certification as eligibility criteria to trade derivatives…in this way the traders who loose money will be aware of the risks and think twice before doing mindless speculative trades…another way could be if it is possible to execute trades in derivatives only when one position is accompanied with another offsetting position (hedged)…but this would be for the tech teams to figure out if the broker platform can be modified in such a way that it allows a trader to place only hedged trades and no single-leg(speculative) trades in derivatives…another thing which i would want to add is that sebi is completely ignoring the fact that for some traders who dont do their homework (and make losses as result) it is also punishing those traders who do their homework.
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This is not practical.
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why?
@nithin Thanks for giving your views
You are right people lose money in derivatives trading when they come without knowledge and safeguards … but then they also keep trying to recover their previous losses … so instead of completely banning a complete group on the basis of a few persons to trade in derivatives won’t it be more practical to take a knowledge test first before allowing derivatives trading … or allow the new comers to trade only in derivatives with smaller lots … there is a need for our markets to mature and that can take place if traders mature by learning for themselves …but excluding people from trading derivatives will make them desperate for other risky avenues since they have now seen how money can be earned thru derivatives …so a better idea would be to reintroduce mini versions of derivatives for smaller traders instead of barring them on the basis of net worth … this idea can challenged in courts because no-one can stop a man from losing his own money if wants to do it … ask people to sign a disclaimer or ask them to take a test before trading …hope you guys manage to come up with a reasonable solution … which is in favour of both small traders and sebi
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Does any other exchange on Earth can dare to charge STT on top of Turnover charges + GST + LTCG/STCG + ITR + Stamp (not mentioning other charges because it hurts)? May be SEBI’s intention is to check Algos but at the cost of throat slitting retailers. Govt. of India is just another business firm which strengthens its own political and personal interests. I am sorry to say we live in “World’s Largest Corrupt Democracy”.
Thank you Mr. Kamath for sharing your thoughts frankly. If knowledge in derivative products is the challenge then why penalize retailers with this discriminative propaganda? Instead of capping, why not create Certification Programs to bridge the knowledge gaps? I think that would be more rationale than shutting up the minority retailers. Putting money in the Stock market is a probability game, if many losses, at the same time it is also true that many lives have seen financial freedom only because of the Markets. Prohibiting participations with so stringent and restrictive rules is not a solution. I am sure, you and your team knows the best on what stance to take.
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Of course, I don’t think there will be a blanket ban. IF all retail is banned, it is as good as closing down derivatives markets in India. Let us see what SEBI proposes.
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When can we expect some news on this ?
i think SEBI has nothing to with the losses of any individual.
it’s traders responsibility to risk their money in trading equity or derivative.
if one is losing money in trading its his personal matter, no one should restrict him loose money.
I think SEBI is not interested in stopping people making loss but it is stopping people making profits from trading.
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Exactly! SEBI is scared and thinks our economy might crash like the western markets if more and more start to enter the markets. Some conservativeness is also necessary but it is a disgraceful idea that one would enter on the basis of his or her financial worth instead of own merit.
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Does SEBI say to listed company that you are listed company and you are not allowed to show losses on your balancesheets?? Does SEBI force any listed company to pay divideds to the shareholders evenif the company reports loss??
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Certification is a good idea
But you know bypassing these agencies will happen naturally at one time …when their strict regulations will cross all boundaries … because for the last so many years they have not been able to curb some of the wrong practices … have not been able to develop the market in a balanced way … they are still more focussed on helping rich grow richer and placing restrictions on smaller traders even to trade with their own money in the garb of protecting them … hell bent on making another failed market
The above picture can explain what needs to be done … hope sebi understands that everyone has a desire to earn well like others and shutting doors in the garb of rules is not what people will take lying down
We are not living in a pre-independence era … everyone today has access to information and can freely approach justice
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@Vandana1 Every country will have one regulator as mandated in the constitution. If you think this body of law is doing wrong, you can go to courts and get reprieve etc etc …All this is ok but think about what can be done now. Practicality !
Forming a union and stopping trading is achievable. And that will teach the overlords a lesson easily. Discuss such things.
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Where man ?? Where do you find green pastures other than normal equity segment. F/O is too risky with those damn huge lots. Forex is not allowed … Bitcoin is illegal… investing requires a huge corpus… real estate don’t even talk about it… Bonds are junks… lol so the only pasture that is green is normal equity segment which have been providing nice service for generations and generations now…
Thats why its damn evil of SEBI to twist and pervert the normal equity segment by not allowing small traders like us… Where are we to go huh ??? Many people of my age have finished college and pursued trading for living as a career… We don’t have any net worth. After 2 - 3 years of learning about the markets about its many details now its time to actually trade for a living and the best starting point is equity with small positions… And now SEBI is saying that it will damage this most nominal and accessible way for us… Who will listen to our plea ??
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@Vandana1 Very nice work. I’m fully in your support. Like @AkashKB mentioned you should be the leader of this movement here.
No kidding for real. Your arguments have the necessary points that will hit right at home. Totally supporting.
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Thank you
Now SEBI has started doing British giri
I agree that a regulator has to be there but it should make mature and reasonable rules.
You’re right currently our focus must be on how to gather maximum support to resist any such rule in the making so that everyone is not clubbed under one rigid rule …there must be other conditions which people can fulfil to do trading
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