Brokerages stock fall up to 8% after Sebi curbs F&O rules; details here
Source: Business Standard
Stock Market, Market(Photo: Shutterstock)
Brokerage firms in focus: Brokerage firms such as IIFL Securities, 5Paisa, and Geojit Financial Services dropped up to 8 per cent, on Thursday, October 3, 2024, following the Securities and Exchange Board of India’s (Sebi) announcement of a new six-step plan to tighten futures and options (F&O) regulations.
Among individual stocks, 5Paisa declined 7.65 per cent, followed by IIFL Securities (down 4.76 per cent), Geojit Financial Services (down 3.32 per cent) and Motilal Oswal Financial Services (down 3.15 per cent).
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“Angel could see transitionary hit to earnings as the regulations are implemented and the company gauges the impact before making corrective actions. However, we believe the company is in a transformational phase wherein share of financial products distribution (loans and fixed income), wealth management and AMC, will start contributing meaningfully over the next couple of years. We retain our ‘Buy’ rating on the stock,” Motilal Oswal said in a note.
Here’s what led to such a mixed reaction from the brokerages:
The mixed reactions among brokerages stem from Sebi’s recent announcement, which detailed major changes aimed at curbing excessive speculation and addressing concerns about retail traders’ mounting losses.
Key measures include increasing the minimum contract size from Rs 5 lakh to Rs 15 lakh, raising margin requirements, and requiring upfront collection of option premiums from buyers.
In response to these concerns, Sebi released a consultation paper in July outlining the proposed changes, which were then reviewed by an expert working group and the secondary market advisory committee.
The new measures, designed to raise barriers to entry for retail participants, will be implemented in phases, with three of the changes set to take effect on November 20.
First Published: Oct 03 2024 | 11:53 AM IST
