SEBI reviewing equity derivatives rules - wants to deter retail investors in F&O

Read an article on Moneycontol regarding “SEBI reviewing equity derivatives rules; wants to deter retail investors in F&O”

It states increasing F&O lot value from 5 lakh to 10 lakh? Already they have increased from 2 lakh to 5 lakh and now again to 10 Lakh?

Do you guys think it will be increased again?
Won’t this affect liquidity and affect hedging?
Does it affect brokers like Zerodha who earns 90% from F&O trading?


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hopefully this is just a rumour . many of us> traders are concentrating only on f & o .

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.


I agree if SEBI wants to do something it needs to check manipulation like this. Stocks like Infibeam has been in trading ban for entire month since it came in F&O segment.

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Harshendra… Sebi is also very slow in resolving cases…

See reliance case took 10 long yrs… What happened to those traders who might have suffered heavy losses is not known…

Actually brokers shud b more worried as their business model depends heavily on fno traders…


@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 ?

A good paper to read on this is here

And - impact on discount brokerages will I guess be they have to provide higher margins to enable participation - and now they can sell “Extra High Margin” financing packages and get some more revenue :slight_smile:

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So you are saying that there is no manipulation in some F&O scrips through option contracts ? If you add the OI of all options contract the sum will be less then the OI of 780 PE.

@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.

I will make formal complaint with SEBI tomorrow. here.

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howt his activities affect retail trader?
please give simple explanation

Someone like Mr.Nithin needs to address this queries. He would have more information about it

@NithinKamath Please check out this post and the subsequent comments. What do you think is happening now and going to happen with F&O stocks in the future as well?

@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.


@harshendrasingh: Okay, I lost you at how F&O ban keeps spot price firm. Can you please explain ?

I mentioned if it is in F&O ban you can’t create fresh short position and if you can’t create one you can’t bring the prices down.

@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’ :fearful:

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!

Happy GST Weekend!

Good point, haribabu Ji
you are genius my friend…

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 ? >>>>> :neutral_face:

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