Why did the exchanges publish a clarification on no additional intraday leverage?

Few stocks are quoting at 10, few at 100 few at 1000, common lot size may not make sense but common contract value, I opine.

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If so let the SEBI to start educating retailers!!!, but , instead they are trying to hurt them

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Yes But SEBI can do it , many times they take example of USA market , but while implementing certain thing they go in a wrong way :innocent: i may be wrong , in USA all the Derivative contract lot size is 100 only , even for $10 stock or for Google

Yeah, US is like that, I think.

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No doubt that on topics like leverage many people’s ( including me ) view and of Zerodha are very different and on this forum they have written about it
But it doesn’t mean that anyone has right to post any fake video just to malign Zerodha’s image.
No doubt Zerodha is One of the most successful and reputated brokerage house .
Please maintain dignity.

@kgudepu

This is one (video that was shared earlier on some fraud) of the most asked queries we get - Stoploss triggered but doesn’t show up on the chart. I have explained it here.

Thanks Nitin.

Thanks Sharma Rohit. Wow Great.

There is no relation with minimum contract value like 5 lakh or 10 lakh and investor/trader education.
SEBI never ban Fresh investor/traders who come with huge money and zero knowledge in stock market. They lose big money much faster.

When someone without enough knowledge to stock market come here with big money with the aim of quick return why SEBI is not barring them?

People are coming here with large capital (like money from property selling, inheritance, retirement benefit, money generated from other business income) and zero knowledge are losing much bigger money than small retail investors. SEBI don’t care. They are investing with risky small cap-mid cap stock or start trading with future market with big money with zero knowledge, SEBI don’t care.
But if some knowledgeable person like MBA-MCA-IT-Financial students or younger workers trying to trade with enough knowledge, using leverage cleverly, learning to manage the risk with leverage then SEBI want to stop the opportunity to use the leverage cleverly as a professional trader.

We all know even professional traders use the leverage when they need it. Leverage is a part of the tool for trading. Yes indicators are also double edge sword like leverage and traders are using them without knowledge and losing money quickly. People are investing penny stocks, small cap, mid cap, large cap stocks which are in down turn to make quick gains and losing money. What SEBI can do?

SEBI can’t prevent losing money by any margin or trading capital restriction because there are plenty of ways to gain quickly and lose quickly.
It’s better to check proper education of investors before investing or trading but SEBI will not do that for sure. SEBI is using its power for their own interest only in the name of investors protection.

Frankly speaking SEBI will not able to stop intraday leverage in F&O completely bcoz everywhere leverage is a part of the game in stock market.

The whole world works with demand-supply. As long as there is demand there will be supply. The demand of leverage is much more with underdeveloped stock market like India than developed stock market like USA, so there is no comparison with India with USA.

Levege is here to stay as there is constant demand. Also per capita income of indian retail traders don’t match with USA, so comparing with their 25K USD restriction (or leverage) is meaningless.

It’s better to concentrate on trading than SEBI drama now.

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This is precisely the same information that i got as well.

Don’t know how to attach reply from another thread, but @nithin posted this. Looks like the nightmare is almost over guys! :partying_face:

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Well said. This is what is happening and SEBI doesnt care how its rules is working. Some incident happens … create a new rule … slap it on the market … wait for next bad event to make another rule = SEBI

Actual job of SEBI is something else. Penny wise pound foolish !
Another example of SEBI doing its job so well…

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This is just like tax terrorism :rage:

I liked to trade futures but now margins are huge and liquidity has crashed.
I wasnt much interested in options but anyhow now they are illiquid, so they are also gone.
I loved to swing trade equities, now I fear that I will get notices !
Now what to trade ?

SEBI : Now onwards no leverages … retailers go die !
Kanhaiya Kumar speech : Hum sab is desh ki nagrik hai, aur jab hum is desh ki nagrik hai, toh is desh ka samvidhan sabhi nagrikon ko trading karne ka aur sapne dekhne ka adhikar deti hai… aap humari sapno ko cheenlena chahte hai ?

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The report said Futures segment accounts for 10-15% of market volume and options accounts for 80-85%.

Above report is not showing the true picture.
Because, the actual trading turnover in option which is Premium Turnover is very low compared to future turnover.
80-85% option turnover derived from Strike+Premium turnover, this is certainly not actual trading turnover using only premium.

Due to this ambiguity to option turnover calculation even NSE now give both type of turnover, actual premium turnover is much lower.

For example if we collect today NSE data,
NIFTY 12500 CE actual premium turnover for today was only about 1,102 lakh Crore. Whereas strike+premium turnover was 16,90,224 lakh Crore which is not real trading turnover.

If some small retail investor buy sell few lots of options few times with even Rs 10,000 in trading capital then such strike+premium turnover will be Few Crores EOD which is completely non real.

But they are comparing such imaginary turnover of options with real turnover of futures to show only 15% volume in future and so no harm for intraday margin restriction for future segment. What a logic!

But the fact is chart patterns, support resistance etc better work with future than option so most of smart small retail traders(who are making money) prefer future market more than options.
Such margin restriction will hurt such small-medium profitable trader more bcoz with time and effort they learned how to use leverage carefully as edge.

On the other hand beginners with small capital of few thousands usually try their hands in option market-penny stocks etc where they can quickly gain(more risk-more reward) and eventually they lose their capital much quickly than future. They will lose their money anyway bcoz they come without experience. SEBI can’t save them with any kind of margin restriction. Only way to save them to educate them, give them demo platform so that they don’t lose real money. But NSE closed their demo platform long ago which has very helpful for newcomers.

So, the whole thing of not taking actual premium turnover of options and only converting only few thousand premium turnover to few crores(using strike+premium) are intensional.
The fact is the option market is much smaller than future market if we consider the the actual premium turnover.
Also the fact is actual trading capital of future market trader (in average or total) is more than 85% of option market trader. Unfortunately they are hiding the real fact.

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@nithin, @siva:
Need couple of clarifications -

  1. My understanding is that currently MTM losses need to be settled in cash mandatorily (irrespective of margin available thru pledged shares) and with this new circular even MTM losses can be settled via margin available thru pledged shares or any other approved pledges.
    Can you please confirm.
  2. Has Zerodha already implemented the new rules (I am specifically interested to know whether BO/CO margins have been increased per the new circular) or will this be implemented at a future date?

Thanks

  1. No, MTM losses will have to brought in through cash.
  2. We are slowly moving clients to the new lower leverage structure. Slow because we are now waiting on getting some clarity on what the new regulations on this will be.
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@nithin @siva
Sir if SEBI said that they are okay with brokers fund their clients’ margin requirements with their (brokers’) own funds which clearly shows zerodha will be unaffected by this norm and also there is no chance SEBI will reject broker forum’s proposal if SEBI said they are okay then why zerodha is moving clients to new lower leverage structure? Do you think still there is chances leverage system will get down by SEBI by rejecting brokers proposal?

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@nithin could you please give an idea what are you folks trying to implement !! When would be the complete clarity expected as there were two contradictory articles .

Still there is no full clarity from sebi on this, officially it has to come out, till then latest circular stand out.

Hoping to get full clarity in few days.