Comment on Intraday leverages reduced across the board

Himanshu commented on 04 Jan 2020, 10:50 AM

The biggest shame of this whole scenario is the push for this absurd restriction from brokers like Zerodha and a few other. Brokers are supposed to represent their clients not suppress them. I really appreciate Zerodha and Nithin. But now when zerodha is lacking in any new competitive advantage and playing field is getting even for most brokers i.e: less brokerage,fine platform, reliability etc. This is how you try to get ahead. This could be the only explanation for Nithin’s chauvinistic love for this restriction. The logics provided are

1: Leverage looks good but is a double edged sword and can also cause big losses – yes, True but so is everything else in the market. You can refuse leverage and still lose your life savings in cash market. If this is the fear then keep the people out of the market all together. In every way the whole market is a double edged sword too.

2: For the protection of retail traders : if you guys are so much worried about the retail protection then do trades on their behalf. According to this logic there was no point of having any leverage instrument in the market such as futures and options.

3: Brokers or sebi never lose a single dime because of an individual trade be it leveraged 60x or 0x. Instead both get paid every damn time whether we lose or win in a trade so both should stop acting like they are doing us any favour here.

4: If you lads were so worried about retail traders then a broker as big as Karvy would not have done what it did.

5. Instead of curbing that problem you guys are decreasing leverage hence pushing retail traders to have more money in with broker making them more vulnerable to the scams that you failed to prevent. (Doesn’t sound like a retail protection to me)

6: Orders like BO and CO come with SL and there can be no protection more than a stop loss then what is the logic of cutting leverage there ?

7: People who understand this profession truly and make living off it are the ones who have leverage as the only bridge between them now and them being the big boy of market.

8: People who lose will continue to lose and only the dumbest of all can think that mere change in leverage can change that, so nobody will save this trader anyway, secondly the big boys with big bucks will also not give a damn because they don’t need the leverage. The only people this will affect are the people who have the understanding of market ways and are using leverage to increase their already existing profits and not to gamble in the market.

Now since Nithin posted it, I don’t expect it to be a rumour but I am glad he posted before the official circular. Atleast now Sebi can see how the so called retail traders “they are trying to protect” feel about the tyrany and absurdity of this level.

With expected decrease in margin for hedged positions I understand the regulators want to push less risky way of trading for new comers and most are okay with it. But what on earth is the point to disrupt the already fine system just because one or two brokers came to them weeping.

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