SEBI has cracked down on F&O trading!!!
Stock market regulator SEBI has prepared to regulate Futures & Options. SEBI has said that a new framework will be implemented to regulate high-risk futures and options. The contract data-size in F&O will be increased from Rs 5-10 lakh to Rs 15 lakh and an exchange will be allowed only one weekly expiry.
Strictness on F&O from november 20
To strengthen the equity index derivatives framework, SEBI's regulation regarding futures and options will be implemented in different phases from november 20, 2024. SEBI has proposed 6 rules to regulate futures and options trading. SEBI has proposed that the option premium will be recovered upfront from the option buyer. This rule will come into effect from february 1, 2025. Also, intraday monitoring of position limits will be done from april 1, 2025.
Derivative contract for only one index in a week
On the day of expiry, there is a sharp jump in volume in which the holding period is of a few minutes and a lot of volatility is also seen in the value of the index throughout the day and on expiry. SEBI said, this affects the safety of investors and market stability, but there is no increase in capital. Therefore, the regulator has made it mandatory that each exchange will have derivative contract for only one index in a week.
F&O traders are suffering huge losses
Recently, a SEBI report has come, according to which 1.13 crore traders trading in the Derivatives Segment i.e. Futures and Options lost Rs 1.81 lakh crore. In the financial year 2023-24, investors have lost Rs 75000 crore. SEBI said in its report that traders who suffered a loss of Rs 1 crore, which is 92.8 percent of the total traders, have suffered a loss of Rs 2 lakh while trading in futures and options in the last three financial years. Only 7.2 percent of futures and options traders have made profits during the last three financial years. Due to the losses being incurred by investors in futures trading, Finance minister Nirmala Sitharaman has increased the Securities Transaction Tax on futures and options trade, which has come into effect from october 1, 2024.