"SEBI's Proposal: A Threat to Small Retail Traders"

13 ביולי

The Securities and Exchange Board of India (SEBI) has proposed new rules to reduce the high volume of derivatives trading. One of these measures is to increase the minimum trading amount, known as the lot size, to ₹20-30 lakh. This is a concern for small retail traders who make profits, as it will make it difficult for them to trade.

However, the same SEBI allowed daily expiries for Nifty options, which has further led to an increase in trading volume. Now, they are proposing to switch back to weekly expiries, which is a good move actually. However, if the lot size is increased, only big players will be able to trade and earn profits, while small retail traders will either have to stop trading or borrow money to trade. But what if most of these traders borrow money and end up making losses again? In that case, this change is not a solution

The government claims that these new rules are beneficial for retail traders because many of them are experiencing significant losses. However, I believe this is nonsense. The government previously praised retail traders for participating in the market and even the National Stock Exchange (NSE) considered extending trading hours before. But everyone knows that many retail traders incur losses due to a lack of knowledge about the market and greed.

There are numerous social media fake influencers who deceive people by showcasing fabricated profits and promising easy money. These influencers attract individuals who are desperate for an additional source of income due to their low salaries, grueling work hours, or unemployment. These people yearn to earn money quickly without investing excessive time.

1. So Banning influencers who provide false P&L statements: Regulators can take action against influencers who mislead the public by presenting fake trading records, making it difficult for them to continue operating.
   
4. Implementing a "cooling period" for traders: If a trader consistently incurs losses for six months, their trading account can be temporarily blocked or restricted, giving them time to reassess their investment strategy.
   
6. Reintroducing traditional expiry methods: reverting back to the old expiration method (instead of daily expiration), the market may become more stable and less prone to excessive trading volumes.
   

By implementing these measures, the government and regulatory bodies can reduce trading volumes in derivatives and protect investors from fraudulent activities.

" Finally I respectfully ask SEBI to reconsider their proposal. There are many retail traders who have a good income, but they don't have a lot of money to start with. It's like starting a small business - you usually start with a little money and then gradually add more as the business grows. It would be unfair to require retail traders to start trading with a large amount of money.