Indian brokerages pare losses as tightening of derivatives trading not as harsh as feared (updated)

Motilal Oswal Financial Services

03/10/2024 06:21

(Rewrites paragraph 1, updates shares in paragraphs 4-6, adds
background throughout)
       Oct 3 (Reuters) - Shares of Indian brokerages pared
losses after slipping earlier on Thursday, as analysts said the
markets regulator's tightening of rules for derivatives trading
was not as harsh as anticipated.
    The Securities and Exchange Board of India (SEBI) on Tuesday
raised the entry barrier and made it more costly to trade in the
equity derivatives. The changes will be effective from Nov. 20. 
   
    SEBI had first proposed tightening derivatives trading in
July. 
    Brokerage Aditya Birla Money  ABML.NS , which fell as much
as 3.3%, was trading down 2.2% as of 10:38 a.m. IST. Discount
broker 5Paisa Capital  PAIS.NS  was last up 1.8% after falling
as much as 7%.
    Discount broker Angel One  ANGO.NS  fell as much as 5.8% but
recovered to trade higher by 7%. The broker had said in July it
was considering raising charges on its other services to reduce
the impact on revenue.
    Shares of exchange operator BSE  BSEL.NS  were up 9% after
falling nearly 3% earlier.
    SEBI's hike in margins for short options contracts was lower
than expected and could help soften the impact from reduced
participation, Jefferies said in a note.
    The hike in the minimum contract size of two-to-three times
was also lower than the expected three-to-four-fold hike, the
brokerage said.
    Indian authorities have been raising concerns about the
unchecked explosion of retail investor trading in derivatives
and the possibility that it could create future challenges for
the markets, investor sentiment and household finances.
    A SEBI study published last month showed that individual
Indian traders made net losses totalling 1.81 trillion rupees
($21.56 billion) in futures and options in the three years to
March 2024, with only 7.2% making a profit.


($1 = 83.9330 Indian rupees)

 (Reporting by Nandan Mandayam in Bengaluru; Editing by Mrigank
Dhaniwala)
 ((Nandan.Mandayam@thomsonreuters.com; Mobile: +91 9591011727;))