New SEBI options rules misfire, share traders bear brunt with lakhs in dues

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The Hindalco incident is a case in point, where it seems that the new option rules may create systemic risk in future as retail traders are defaulting in droves as they are neither aware about these rules nor able to fathom for whose benefits these rules are introduced. To top it all, there seems to be no provision of not penalising a trader in an event where square off is not possible due to lack of liquidity in the system!

Dr. Sanjay also lamented about receiving no support from his broker, Profitmart. He told Fortune India that the broker deducted about ₹35 lakh from his account, and up until the time Fortune spoke with him, on January 8, 2022, he has not received any contract note or any information regarding his Hindalco option Trade. His broker, Profitmart, also squared off his positions in gold and nickel without informing him at the same time.

“If they could square-off my positions in gold and nickel without informing me, why could they not do it with my Hindalco Put option?” Dr. Sanjay wondered.

Chennai-based engineer and trader Dinesh M who made a YouTube video narrating his plight said he is in no position to repay the ₹12 lakh loss to his broker, ICICI Direct, as he already has a ₹15 lakh loan liability. He paid a premium of ₹17,000 for 42 lots of Hindalco 450 Put. He is still wondering how his ₹17,000 liability turned into ₹12 lakh loss as he has not received his contract note from ICICI Direct.

“My trading account has been frozen and my salary account is with ICICI Bank, so I am not sure whether my future months’ salary would be coming to me,” Dinesh M said. He took out a heavy loan in 2020 as his baby was born prematurely, and now he is again saddled with trading losses that are beyond his means to repay. “After putting up my plight on Twitter and YouTube, I got a crowd funding of ₹1.4 lakh till the evening of November 9,” he said. Dinesh M also complained that even after many follow-ups, the ICICI Direct staff is clueless, and now he has given up on further follow-ups.

“What could we have done when there was not a single buyer available for us to square off our trade? How does this rule even make sense when we are supposed to sell to square off our positions but we are not able to sell because there are no buyers available?” asked Dinesh M.