SEBI Mandate On Risk Disclosures For Derivative Traders

Earlier This Year In Month Of January SEBI Published A Study Showing that only 1Out Of 10 Derivative Traders Are Able To Make Profit. SEBI Has Also Noted That There Has Been Significant Growth In Participation Of Investors In The Indian Securities Market, Including In The Derivatives Segment After That SEBI Took Some Vital Steps To Empower Trader & Investors With Detailed Information About The Risks Associated With Trading In Derivatives.

According To SEBI’s Current Circular It Instructed Newly categorised 15 (QSBs) Qualified Stock Brokers Like Zerodha, Angel One,5Paisa Which Has Majority Of Stock Market Client Base

• To maintain the profit and loss (P&L) Data Of Their clients And Maintain It For Minimum Five Years Of Time Frame.

• There Should Be Prominent Risk Disclosures, Covering At Least Half Of The Screen. Further, Upon Login, The Client Will Be Prompted To Read These Disclosures And Allowed To Proceed Only If The Person Acknowledge The Same. The Risk Disclosure Pop-up Will Show Details From The SEBI Study With Statements Like Loss Makers Registering Net Trading Loss Close To Rs 50,000, Profit Makers Incurring 15-50 per cent Of The Profit As Transaction Cost, And That Loss Makers Expend An Additional 28 per cent Of The Net Trading Losses As Transaction Costs.

After Verifying Above Disclosure Client Can Use The Application Further For Investment Or Trading Activities.  

There is Nothing Like Drastic Add On Or Modification In Current Circular Its Just A Precautionary Measure Taken By SEBI As A Regulator For The Retail  Trader/Investors To Protect Or Safeguard Them From Future Miss-happening As we All Know Prevention Is Better Than Cure.