Some longterm Benefit of SEBI new pick margin rules

Some longterm Benefit of SEBI new pick margin rules we will discuss here one by one.

Long term sustainability of retail traders:-

At the present scenarios, many brokers are giving very high margin to trade. The idea is to attract novice retail traders by showing them high earnings potential. However, this is done hiding the risk factor of trading through a high margin. A naive trader can lose the little sum with which he starts due to this increased exposure. They are interested in taking new clients by showing the massive earning potential. But once, the retailer is exposed to reality; he loses faith in the market. Therefore, we see so many people are pessimistic regarding in the stock market. It’s always important to have sustainable growth instead of the massive rise and unimaginable fall. SEBI’s new margin rule will curb this practice of giving high leverage. Thus, people will have a realistic expectation. They can learn things before wiping out entire capital.

Fair competition between brokers:-

By taking the clients’ money at stake, brokers used to give high margins to lure clients. We always get attracted to the high gain but never meant to get exposed to high risk. This is the present norm by brokers and advisors to hide the risk factor or potential loss. The ridiculously high margin disrupts the fair competition in the brokers. Some are giving low margin, but clients’ capital protection is high. Others are providing a high margin of risking clients’ capital. As a new trader, we reject the former and accept the latter. Now, things will be fair.

Panic selling and massive falls will be restricted:-

SEBI’s new margin rule has the potential to curb the unrestrained fall that we see in the Indian market. We always say that market goes up the stairs and comes down in the lift. The high leveraged position is responsible for that. When some negative news come, stocks fall in panic. This happens as the brokers clear their position to safeguard their business. Retailers unwillingly have to accept this because they have taken position through leveraging. Now, as the margin requirement increases significantly, this panic falls will be restrained.

SEBI’s new margin rule will cause some amount to disruption in the market in the coming few days. But just the way the implementation of T+2 days’ clearing is now got normalized, this will be well suited too. Moreover, what we believe is this will increase participation in the long run. Fewer people will lose their money. The return will be higher. Unparalleled volatility will get curbed. There exists no other better alternative for Indian investors. So, we belief SEBI’s new margin rule will benefit the Indian stock market.

For details about SEBI’s new margin rule read our article.

Read our Previous Post Here.

To Get Best research Technical Calls Join Us.

Disclaimer: The views and investment tips expressed by investment experts on Stocktradingfno.com are for educational purposes only. Before taking any investment decisions, consult with your financial advisors.