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Hello, Executive Editor-in-Chief for Digital Editor-in-Chief Spria Srivastava in CNBC International. Welcome to this publication inside India.
This week, I look at the markets in India’s derivatives marked a lot of concern for retail investors designed with young people and fast profit promises.
Mumbai, India: India (CEBI) logo (CEBI) logo (CEBI) logo is seen in the office building in the Bandra Kurla Complex (BKC) in Mumbai.
Sopa Pictures | Lightrocket | Getty pictures
This report is from CNBC’s “India” newsletter. As you can see? You can subscribe here.
The great story
One week ago, the Indian markets regulator sent a strong signal to the global trade company in the local trade market. The action came with tears of tears: $ 570 million earnings, index manipulation claims and suggestion that arbitration trading strategies can pass.
As the noise is inhabited and the true story can sleep elsewhere, as they are inhabited and starting legally. This is the case, offers a window to the structure and stress points of the Indian selection market and collided with regulation, technology and retailing enthusiasm.
It is more fragile behind the increase in trade: a new generation of retail investors flood in complex financial products, often with less experience and less protection.
India’s derivatives have grown rapidly. According to the Futures Industry Association, the country is about 60% of global capital derivatives. It looks like this success story in paper. In practice, it is more complicated.
It puts an interval of what separate this market. Who is the trade.
Approximately 11 million people According to the SEBI, capital futures and selection contracts sold in the last fiscal year. Very majority, often young people were often young and compiled for promust fast profit promise in social media platforms and effective accounts. Use many mobile applications, follow the telegram channels or follow the imitation strategies that they do not fully understand. Such behavior, market participants say, are increasingly spread.
The latest research of SEBI data, 9.6 million individual capital subsidiaries, more than 40% of these traders, or more than 6,000 in Indian Rupees or 6,000 per year, and 6,000 per year, and 6,000 per year, in a year, less than 6,000 or less than 6,000 per year or less than 6,000 years or less than $ 6,000.
This means that most participants include risky businessmen with limited income buffers and low official market education.
Analysts often include aggressive strategies affected by social media and telegram groups. The fact that the company’s basics or earnings appears to rite to the satellite, but also reacted to market trends and peers’ activities, or the fear of missing fate. The result was especially exposed to variability between inexperienced traders with limited risk buffers.
The Options market has become hot for a warm-risk trading with a weekly ending, especially for the rapidly developing trade, especially short-term contracts. These options are cheaper and more accessible, at the same time, it is very risky to change the wildly value in a lot or even minutes.
Funding on YouTube and other platforms, millions of retail traders in India are guided by millions of retailers to fuel this trend. The focus is often in speed and volume – short-term earnings are sold quickly and sold to follow.
Many of these investors use strategies that can open daily trade and speed. If the market moves a little against them, you can lose everything. This type of trade is pushing a total market activity, which increases the chances of great losses.
And this is what happened.
Call of adjustment
According to the CEBI, more than 90% of retailers and selection traders lost money last year. The damage was 1.06 trillion rupees or about $ 12.5 billion, an increase of 41% a year ago.
However, this is not just about individual traders who lose money. This creates a bigger problem: so much investors open the door to use the legitimate and effective way to take advantage of professional companies when making emotional or weak-timed bets. These institutional players have better tools, faster systems and more experience, they give them an open edge.
This is the background that makes Jane street work so important.
CEBI accused the index prices for profit from the article of manipulation. Jane Street rejects it by saying that it uses a general and legal tactics between experts, a standard arbitration strategy.
Although the work continues and remained in terms of regulation, the incident shines in the growing space between retail traders and large entities, with the last decision of the CEBI. It also evokes the main question: is the market managed by many arches and short-term acceleration?
If so, what happens in the role of the main performance and value of prices, the determination of prices? And can everyday investors still believe that the system is fair?
Sebi is in a difficult situation. More people want more global firms to enter markets and invest in India. However, retail investors should be protected from excess or exploitation.
For this purpose, the SEBI considers to ban weekly trade sizes, including minimum trade sizes and individual shares, including the minimum trade dimensions that require better risk statements.
However, the main problem remains: how do you grow a fast, exciting market without dangerous for newcomers?
India’s derivatives are a remarkable story of Boom, finance and technological scale. But only a scale is not a metric of success. As the market mature, only how many people are not with the participation, not how long it is, and continues to fail.
The next happening will not only form India’s financial future. It can serve as a careful tale for other markets looking at the same growing pain.
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What happened in the markets?
Indian stocks were sold on Thursday Oily 50 Index, low at 12:30 local time.
The index is consistently over 25,000 this month, and according to LSEG, this year has risen more than 7% this year.
The assessment was 10 years of Indian government bond 6.315%.
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Go out
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