Suggestions of exper comitee on f&o as per sources

The suggestion of fewer strikes will not increase concentration risk in options. Everyone will be sitting on the same strike when some news comes, and there will be panic to exit. As per my understanding, please give your point of view.

This is going from regulation to over regulation. Banning weekly expiry to one day is a disastrous idea. Just increase the lot size to 3-4x if you have to but don’t ban stuff. Our market has just started thriving and they keep coming up with ideas to lock things down. Banning expiries is like using the nuclear option as a first response. They should increase margins, make more disclosures or make fno traders go through a form where they are made aware of the risks and have to fill some stuff manually to complete it. This will work as a good nudge and stop many. The rest you can’t stop. If a person wants to smoke and drink and waste his life, he will. The government can’t act as a nanny state all the time. If a person wants to gamble, he will find such avenues.

Please stop them from using nuclear option as a first measure. It’s impact will be felt for a long time if they do it.
Please @nithin stop this if you can.

Two or three years ago, it was almost the same, so we are going backward in progress because our regulator thinks Ferrari can encounter an accident, so it’s better to degrade to Maruti 800.:sweat_smile::sweat_smile:


hi @nithin what does upfront collection of option premiums from option buyers mean??

i heard some brokers allow option buying with margins.
At Z, option buying is already upfront collected in cash.

What does it even mean that they’ll ban otm strikes. We need otm strikes to hedge atm shorts etc. Those who have 5000 rs to gamble can gamble it with 10 strike otm or 5 strike otm. Doesn’t matter to them. But it will mess up the hedging capability of other market participants.

Totally silly stuff they’re coming up with. It’s like banning roads to prevent accidents.

Overall this is a cocktail of messed up measures which will blast a thriving market to rubble. They need to implement a few things and see the response. They don’t need to fire all weapons in one go. @nithin

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Higher lot sizes makes position sizing less accurate if you size for constant risk. Hope they don’t do that. AFAIK, futures volume hast expanded in same way.

Anyway, if i read correctly, nithin seemed to suggest that SEBI is determined on volume reduction. So Something drastic will probably happen. With 1 weekly per exchange, there will be atleast 2 - one from bse one from nse, so doesnt seem that bad ?

Means if someone is buying options they should pay full premium upfront from their own funds, ex for nifty lot size is 25 and option premium is 100 then one should have 2500 to buy one lot of that nifty, currently few brokers offer leverage in option buying ie if user has 1000 rs ,broker can offer 1500 from his side and can allow user to buy that option.

This is absolutely a good move for option buyers. It will infuse more liquidity from buyers side and give directional moves for buyers who lost major money just to decaying instruments. Also, it will make those Jane Street strategies obsolete n prompt them to recreate new ones to trial n test. Now market will have more trending days than sidewise. This is just my view seeing the Options market closely since March 24.

not bad if allow only nifty50,banknifty for weekly expriy and sensex


If the contract size is increased , SPAN will go up but Exposure margin remains the same right ?

Exposure also will go up as it is based on percentage of contract value.

What about future contracts?
For example, if a lot of nifty currently 68k, will it also increase by 4-5 times? @siva

They are going to increase contract value from 5 lacs to 20-30 lacs.

i.e. NIFTY at 20,000 and 1 lot = 25 Quantities. contract value is 5 lacs

if they decide to increase it to 30 lacs. 3000000/20000 = 150 Q.

1 lot will have 150 Quantities so traders with small capital can not trade.

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This is not going well.
Govt doesn’t want small people to progress. When someone starts in the market, they start small and learn a lot of new things about personal finance and compounding and what not.
There are promises of becoming a developed nation and competing with the USA and China, but how will that happen if small people are not given a chance to advance?
Not just trading, but every business is being made tough instead of being made simple.

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Not sure, SEBI may issue consultation paper to collect public feedback before finalizing, so it may take sometime, only thing we all can do is wait.

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I Completely agree, there is no logic to Fewer Strikes/Higher lot size. The same kind of unwinding will happen in stressed scenarios. This is not gonna deter speculators, in fact there is more systematic risk if this goes through.

Agreed, pathetic logic by SEBI