Hello Nithin,
I am an intraday trader, it is my “profession” and my only source of income.
First, SEBI reduces intraday leverage, now its putting in new rules to curb f&o trading, whats next?
lets say 5 years from now SEBI bans intraday shorting or even intraday trades, i will be out of a job.
Do you think SEBI will ever essentially ban intraday trading either through banning shorting or an overall ban? Do you think SEBI cares about intraday traders?
Thanks.
Hmmm… I don’t think they will ban trading. But yeah, they generally feel that F&O trading, especially guys trading on the expiry day, doesn’t aid in any capital formation in the economy.
Since last 6-8 months, all of us have been hearing a lot (in mainstream media, paid articles or otherwise) about how explosive the growth has been in F&O (often accompanied by data on notional value of contracts and no of contracts traded data) and how F&O trading doesn’t contribute anything to “productive capital” / “capital formation” etc. Let me highlight a few things:
A) Unproductive capital: By that logic, intraday trading also doesn’t aid in capital formation but it has been there for decades in almost all markets worldwide with no one having any problem. SEBI seems to forget that for an efficient functioning of markets hedgers, speculators and arbitrageurs are all necessary. You can’t just pick and choose what you want and discard the other because you or your beliefs are not in line with it. Just for the sake of extending the argument how does investing in gold, bitcoin / alt currency, or for that sake making teams on dream 11 increase productive capital in the country. Why doesn’t RBI ban gold and jewellery purchases by retailers as well and explain to public that investment in it is unproductive capital.
B) Explosive growth: SEBI’s own data quoted by ET and Livemint shows that F&O turnover in India increased from INR 210 lakh crore in FY2018 to INR 500 lakh crore in FY2024. The compounded annual growth rate is 15.5%. How is 15% nominal growth rate (for anything) high when country’s real GDP is growing at 7-8% as per govt data and inflation is between 4-6% (RBI data). Let us compare this with growth in AUM of equity oriented MFs from Mar 2018 (INR 7.5 lakh crore) to March 2024 (INR 23.5 lakh crore) (provided by AMFI). The CAGR is 21%. Are we banning investments in MFs and secondary market trades also? And the irony is that Ms Buch says all her decisions are led by data.
Reassuring. Thanks.
Good points on the rate of growth and mutual funds but she seems like she has her own agenda.
I guess our only source of reassurance is the STT and GST collected off of intraday trades, since the government wont be too happy to lose that income so they wont be too eager to ban it.
What do you mean trading on expiry day doesn’t contribute to capital formation? How will the positions due to “trading that lead to capital formation on non expiry days” be closed then? Or are they implying that F&O trading doesn’t contribute anything to the economy?
If you ban trading on current expiry days, then the day before that will become the “effective expiry day”. In commodities this is exactly what happens, there is a first notice date on which volume and volatility both are high, hence “effective expiry day”.
Y expect nythn frm anyone be it sebi or anyone . Jst keep anothr profession in hand . I too sell options bt no expectation. Tomrw they might ban shorting too . Yahan evrryone fr himself bro evryone has vested interest if they dont see their interest they might consider tomrw
IMO, all these dramatizations are to justify and impose more taxes on F&O. I am sure they doesn’t want to slaughter the golden goose.
Bro, why are you underplaying your own profession by putting profession in quotes 
SEBI is gaslighting traders. The main motive remains something else.
In a country of 140 crore , 45 lakh trader’s is an insignificant number.
What will they do when there will be 45 crores traders?
USA - 35% ( Around 10 crore traders), UK 33% ( around 3 crore ),
China 13% ( around 18 crore)
Instead of helping and nurturing traders SEBI is scaring them.
My opinion on this SEBI panic is that Retail traders are creating a lot of noise on charts. Which (HFT/ institutional Traders) don’t like, as it confuses their trading bots and creates hindrance in taking a cohesive and clean entry/ exit.
And these guys are SEBI friends, so…
*edited- for spelling fixes
Not to forget the fact that brokers main source of income is from charges to the F&O traders and the Government too makes a lot from STT from such speculative actions.
I believe, if real intention of the government is to save young ppl who are loosing shit loads of money by getting into this F&O and potential destroying their wealth and savings, i believe they should set a minimum networth required for ppl to enter into such F&O traders.
Once they have fixed a networth amount , then they should fix percentage the maximum percentage of that networth for which a person can enter into such positions, this will limit the number of ppl entering the speculative activity.
If someone doesn’t have a networth required, they should first achieve that networth, before entering into this risky business of F&O.
And if possible, govt should also make ppl go through some sort of a test to determine their understanding of F&O, before allowing them to participate in such trades.
If you are an adult, then there are multiple ways available to destroys ones own life and associated family and loved ones.
Why single out trading and calling it bad just because sebi say so, nahh…??
I dont think ban will happen, not at a time when Sebi is also contemplating adding a new asset class and allowing MF to actively trade derivatives. But they will stop daily expiries and also increase lot sizes. But what is of utmost importance is to stop manipulation in Index stocks by limiting position sizes of individual entities, thankfully they seem to be discussing that too…