You have too many misconceptions -
no taking back upfront margin reporting
The issue was never that of “upfront margin reporting”, it was of “upfront margin collection”
Even before broker had to make good of the NRLM margins for clients. So even if you took MIS positions, exchanges would block the full margin from broker’s pull account.
The recent circular asked brokers to stop this and to make sure that Whole of the NRML margin is “collected” from the clients’ own funds only.
Yup, but if you go through the forum, there has been some new developments, SEBI is considering letting brokers fund intraday margin from broker’s fund, not the pool account, upto a limit called the peak margin, and that’s why I changed from collection to reporting since broker is only going to collect partial and going to fund the rest which they’ll have to “report”. The key word is “Considering”
Nope,
You have read it wrong.
Where it is saying “peak margin” is a"limit"?
Peak margin is what brokers going to report for each client.
So that SEBI may see how much margin was used and possibility that they will allow this use from broker’s own funds.
So will we get back the leverage offered by BO/CO in intraday?
If SEBI allows brokers to use their own funds for leverages , brokerages with NBFC license can do that , probably Zerodha can do that , but definitely cost of trading will go up!!!
I was thinking about the same…
Somebody launch a big NBFC to fund our market escapades 
We will pay the necessary interest rates.
Probably SEBI chief will do after retirement
Sir, why are you worried about number of “Losers” in the intraday market ? Most of traders here against this possible rule are the ones trying to sustain their only profits which is threatened by such rules. And as your two favourite sirs mentioned that need of the hour is decent leverage,time tested strategy, discipline, so on, these are always in the hands of a trader himself and most of them understand this, two sirs or any brokerage or sebi have nearly nothing to do with any of above apart from leverage. Ofcourse leverage is not the most essential in it but you must know every trader is unique and if a trader can control other aspects, most important being the risk then what is in it to sebi or brokers. If someone believes leverage is so bad then you are not forced to take it but those who use it in a controlled framework know what a difference it makes in already profitable trading results (for loses ofcourse you need to cap the risk every damn time). Nobody is saving any trader from any big loss, traders still blow up every once in a while and this will keep happening (ofcourse you can pinch me if for even once your lovable govt, bureaucracy,sebi or anyone else will ever cover a trader blow up. Not saying that they should.). No prevention of margin or some hedge system will “ensure retail traders are protected from big loss” I can bet ya that. Right now only thing this can ensure is the major decrease in the profits of responsible leverage using traders. Such rules make sure that the gap of capital keeps the small trader small even when they are good. Sebi has got 99 problems and interrupting a traders progress shouldn’t be the one.
Yep the whole argument of trying to save retailers by cutting leverage is mindless, by that logic no one should be given money to start a business because most businesses fail…some sort of small mandatory course/test educating new entrants of the why’s and how’s of leverage is more logical than cutting leverage across the board
Guys rest assured after this news I’m confident that leverage will be provided
Don’t worry and please continue trading as usual since most brokers including mine have not yet changed the leverage
I myself was too worried for the past week but it’s not worth it… the whole broker community is working in our favor…
We WILL get leverage … sleep soundly.
They are not banning leverages. They are asking to reduce it. What should be the maximum leverage is debatable but most agree that an optimum level is around 10. Mostly high leverages like 25-40x is not used by institutions or big trader as it is not scalable at that level without moving the market but by small Retailers. You just can’t use words like most or responsible ones as the stats show the most Retailers (more than 75-80%) lose money.
As far as your analogy that giving no money to business is concerned is flawed. Since sebi is not stopping leverage, it’s only reducing it. Correct analogy will be that: you can’t give 100 crore to a new retail business but surely a 1-5 crore is possible.
We need better arguments to defend a case against SEBI. Such childish arguments will only weaker your stand.
Yes but no one gains by capping leverage, if the business analogy is considered in a different way… there’s no regulator capping how much money a business can raise, right?
And you’re being naïve if you think this discussion here is people building a case against SEBI, like SEBI gives a F about retailers:joy:
What I understand from this new circular is no roll back on full margins before all trades. So would be the end of free intraday leverage for discount brokers. Would have to start charging interest for providing additional leverage. I think overall this is good for the markets.
Is my understanding correct @nithin
There is no circular yet, only news article which can go either way, need few more days to know exact status, if has to officially come from sebi. Also broker only used to cover for extra leverage that is being provided till now, Interest can’t be charged on this as that comes under funding and funding is not allowed in fno.
I think you got everything wrong!!
Brokers never got “free intraday leverage”. They gave leverage. By putting their own money for client positions. It seems that most traders thought that NSE used to block only 33k for nifty fut.
With margin reporting only at EOD… IMO brokers do get free intraday leverage as long as trades closed by EOD. Now with reporting of peak margin being proposed that should change.
Nope.
@nithin already explained.
As soon as order hits exchange, exchange will block a nrml margin from brokers’ pool account.
The issue was only between “reporting” and “collecting”.
That’s it.
Hello all, I understood almost all the stuff going on and waiting for the finalised regulations, but apart from everything I want to know that if 0 FnO leverage is implemented, to what extent will it affect market liquidity. Will there be enough movement for trading in intraday? All those news articles and vids have mixed views and that’s really bugging me.
@nithin @maddy_Des sir please provide you view on this
