SEBI is sleeping DOG. despite rampant circular trading happening and punters are continuously ensuring that certain stocks are consistently under F&O BAN, SEBI is just sleeping on this. but wanted to control Retail Traders. because retail traders are not coming onto the streets. We need to plan “OCCUPY DALAL STREET” soon.
See the below Circular Trading. 780 Puts sold and bought by punters. who will buy and sell those deep puts ?
Also see todays 29 June 2017 movement of this Stock.
@haribabu: looks like the stock didnt move much - just from 850 to 840 which is barely a 1.5% move. How did you conclude on circular trading ? Are you judging it only by the put volume ? What is the implication of large OTM put OI ?
@abbanerjee Circular Trading here is a person who is holding more than the average traded quantity in spot and initiating F&O positions to suit his advantage. there are some people who finance these things. the financier will buy puts equivalent to the spot qty and buyer ( punter ) sells the Options.
in this AMARAJABAT case punter is holding more the average traded quantity. look at the below trading details.
@haribabu: I get your argument about engineering a squeeze in spots by holding more than average - but what I cannot get is how circular trading in puts changes the price in spot for the punter who has more than average daily vol as holding. Can you please explain ? The financer pays the premium (as a loan to the punter) and buys the market that the punter makes for the way out of money puts for example. So ? What next ? How does that change the spot market - which is to say that the punter makes all his profits when his puts are ITM. And if the punter is the market of these puts, where will he book his profits from ?
If both seller and buyer of a option contract is same or related parties the net effect is zero. What this Circular Trading does is that it brings the scrip in F&O ban and no one can create fresh short position and remember you can’t bring the stock down by selling it in cash because you will have to sqoff intraday. So this circular trading helps in keeping the price in spot firm and by doing this you can shell out your holdings or even protect your long position.
@abbanerjee In AMARARAJA puts are bought by financier as a safety for the loan given to punter. Loan amount is used to buy equities . They make money in Futures by using equities.
Sharp rise and fall is this. If a stock a rises sharply you can not expect someone to sell within in minutes to bring it back to same level. If it is genuine rise it stays there for some time. It it is falling sharply after rise it means it is operator driven.
SEBI review is still a proposal under discussion with exchanges. But, I believe it wud happen in the coming year.
One alarming thing is proposal to consider the Networth value of a retail trader for allowing the amount of exposure one can take in F&O. Give me a break! It can be aptly called ‘Surgical Strike on Retail F&O traders by SEBI’
About the timeframe by which it might come into force, well, Linking of Aadhaar to Income tax filing(PAN) is mandatory from tommorrow(1stJuly), Linking of Aadhaar to bank account is mandatory by December 2017. After all the missing links getting linked, What Next? is left for anyone to guess!
one important thing in our favor is the traders are part of very small minority who are honestly paying taxes to government ( income tax, gst , stamp duty , stt what not ) & transactions are transparent / digital.
if sebi is so worried about risk why even allow people to invest in stock market ? >>>>>