Indian brokerages fall as markets regulator proposes curbs on options

Motilal Oswal Financial Services

31/07/2024 05:18

BENGALURU, July 31 (Reuters) - Shares of Indian
brokerages fell on Wednesday, a day after the markets regulator
proposed several measures to curb trading in options.
    The Securities and Exchange Board of India (SEBI) on Tuesday
evening proposed raising the minimum trading amount for index
options by over three times, reducing the number of contracts
expiring each week and hiking margins. 
    Shares of Angel One  ANGO.NS , 5Paisa Capital  PAIS.NS , SMC
Global Securities  SMCG.NS , Motilal Oswal  MOFS.NS , Geojit
Financial  GEOJ.NS , Dolat Algotech  DOLA.NS  and IIFL
Securities  IIFS.NS  fell between 1%-5%.
    "Exchanges and retail focused brokers will be most impacted.
 Highest impact can come from reduction in the number of weekly
option contracts," Jefferies said in a note.
    "BSE can offset impact and even gain, if volumes spillover
from discontinued products to those which are continued."
    Shares of exchange operator BSE  BSEL.NS  rose 6%.  
    India has been flagging risks from speculative trading by
retail investors, who have been funnelling savings into its
booming options market. Last week, the government raised the tax
derivative transactions.  
    In fiscal year 2024, over 9 million individuals and firms
dabbled in index derivatives and incurred a loss of 516.89
billion rupees ($6.18 billion), as per a SEBI discussion paper.
    Investec expects a 30% drop in number of derivative orders
per client for Angel One and sees it raising prices to 25 rupees
per order from 20 rupees. 
    Angel One has slipped more than 39% so far this year, the
top loser among brokerages, while Dolat Algotech and Motilal
Oswal  MOFS.NS  are the top gainers, up 117% and 113%,
respectively.
    India's largest discount brokerage, Zerodha, does not expect
a large impact on trading volumes.
    "The suggested changes, even with the securities transaction
charge increase, won't really change options volumes," Nithin
Kamath, CEO and co-founder of Zerodha, said on social media
platform X.


($1 = 83.6980 Indian rupees)

 (Reporting by Sethuraman NR in Bengaluru; Editing by Mrigank
Dhaniwala)
 ((Sethuraman.NR@thomsonreuters.com; (+91 9945291420); Reuters
Messaging: nallur.sethuraman.thomsonreuters.com@reuters.net))