SEBI proposes new rules to protect retail investors in derivatives segment (2024)

FAQs

What is the new rule of SEBI for traders? ›

SEBI has placed restrictions on the use of intraday profits made by traders to carry out additional stock market trading activities on that same day. The profits can only be used 2 days later for trading activities. Traders must fulfil the minimum margin requirement in order to carry out intraday trading.

Under the new proposal, for an individual stock to be included for derivative trading, it must have been traded on 75 per cent of trading days. Additionally, at least 15 per cent of active traders or 200 members, whichever is lower, should have traded the stock.

has taken various measures such as screen based trading system, dematerialization of securities, T+2 rolling settlement and framed various regulations to regulate intermediaries issue and trading of securities, corporate restructuring etc to protect the interest of investor in securities.

SEBI regulates how the security markets and stock exchanges function. SEBI regulates how transfer agents, stock brokers and merchant bankers, etc, function. SEBI handles the registration activity of new brokers, financial advisors, etc. SEBI encourages the formation of Self-regulatory Organizations.

SEBI has mandated market infrastructure institutions or MIIs to eliminate slab-wise transaction charges, introducing a uniform fee structure effective October 1, 2024. This move is expected to enhance transparency and reduce costs for investors while significantly impacting the revenue models of broking firms.

11 Enhancement of limit for defining Retail Individual Investors in public issues. After extensive deliberation on the three options proposed in the Memorandum, the Board decided to enhance the limit on retail individual investor application from `1,00,000 to `2,00,000 across all public issues.

Investor Protection: SEBI's primary objective is to safeguard the rights and interests of stock market participants. To accomplish its objectives, SEBI points these market participants or players in the right direction and protects their financial investments in the market.

Rule 1: Always Use a Trading Plan

You need a trading plan because it can assist you with making coherent trading decisions and define the boundaries of your optimal trade.

Insider trading by a designated person or their close associates is forbidden at all times. According to SEBI laws, a Designated Person who buys or sells any number of the company's stocks may not engage in a contrary transaction within 6 months of the date.

To participate and vote in general meetings either personally or through proxy. To receive dividends in due time once approved in general meetings. To inspect the statutory registers at the registered office of the company. To receive corporate benefits like rights, bonus, etc.

What are the SEBI guidelines on participation by strategic investors? ›

The strategic investor(s) shall, either jointly or severally, invest not less than 5% and not more than 25% of the total offer size.

investor protection involves various measures established to protect the interests of investors from malpractices. Securities and Exchange Board of India (SEBI) is responsible for regulations of the Mutual Funds and safeguard the interests of the investors.

To protect the interests of Indian investors in the securities market. To promote the development and hassle-free functioning of the securities market. To regulate the business operations of the securities market.

Investors use derivatives to hedge a position, increase leverage, or speculate on an asset's movement. Derivatives can be bought or sold over the counter or on an exchange. There are many types of derivative contracts including options, swaps, and futures or forward contracts.

The investors should make an informed decision purely by themselves based on the contents disclosed in the offer documents. SEBI does not associate itself with any issue/issuer and should in no way be construed as a guarantee for the funds that the investor proposes to invest through the issue.

Under the PDT rule, any margin account that executes four or more day trades in a five-market-day period is flagged as a pattern day trader. Getting flagged isn't necessarily bad; it just puts the account under a little more scrutiny.

From May 22, 2024, the U.S. Financial Industry Regulatory Authority (FINRA) rules for margin amendments will require clients to pledge initial, and potentially, variation margin, to brokers as part of trading in a defined subset of securities known as “covered agency transactions”.

According to a report by Jefferies, Sebi's proposed measures to reduce the number of weekly option contracts from 18 to 6 could impact around 35 per cent of industry premiums. However, if trading shifts to the remaining contracts, the overall impact can be reduced to 20-25 per cent.

SEBI Proposes New Measures to Stop Small Traders from Trading in F&O. Last month, the Securities and Exchange Board of India (SEBI) established an expert committee to address the issue of high retail participation driving excessive speculation in the share market.