My Take on ASM, Increasing Lot Size, and Linking ITR/Net Worth to Exposure:
Linking New Worth to Exposure:
Outrightly wrong, and with malicious intention to cut out retail from markets. Also illegal, and against the fundamental rights of citizens to financial freedom and economic equality.
ASM, Incresing Lot Size:
These are also very bad steps and also illogical and not at all sound. The purpose of margins should be to cover the market risk, and nothing else. Any margin above that is required to cover the market risk and volatility just makes no sense. The only purpose it attains is to reduce positions taken by retail. Here are some questions which need to be answered. 1) Why should lot size for SBI be 3000, why it should not be 250 or 500 or 1000? 2) Also if 15% margin is sufficient to cover market risk, why should the margin be 20% or 25%? 3) how can small investors, who have 500 shares of SBI, how can they hedge their positions? Is there any good, logical answer to these three questions. If not, then clearly these steps are not done for welfare of people of India.
If it was in my control, I would reduce F&O lot sizes to 1 lakh per lot. And keep margins at 10-20% depending on whatever is sufficient to cover risk properly. This will not only enable more and more people to trade, this will also mean that even small investors can also hedge their portfolio. The purpose of markets should be to enable even smallest investor to trade or hedge.
Also all these steps which limit retail (ASM, Increasing Lot Size, Linking Net Worth ITR to Exposure etc etc) will make markets more inefficient and more prone to frauds and manipulations. These restrictions means pushing retail money towards mutual funds, which means two things: 1)easy money for mutual funds, 2) less competition to mutual funds from good retail traders. This will make mutual funds also reckless and they will play havoc with retail money, and loose it very big in the markets. Overall the citizens of this country will become victims due to these restrictions, and also the financial markets will become more inefficient. Very big lot sizes, unnecessary margins then required, and other such steps to limit retail are just regressive steps, and nothing else. Or else someone needs to justify the reasons which prove these steps are good. I haven’t seen any logic or good points from SEBI or anyone which can justify these steps to limit retail users.
In summary, the lesser the lot sizes, the lesser the margins but enough and sufficient to cover risk, the more even the smallest retail investor is able to participate in markets, the more inclusive markets are of smallest of investor, the more better it is for efficiency of financial markets, the better it is for retail investors, the better it is for economy, the better is it for common people investing in mutual funds.