It’s a familiar story: whenever we see ideas for regulating rampant speculation in the stock market, we can’t help but wonder if history has taught us any lessons. In my opinion, these new regulations either increase mindless online disclosures or boost income streams for regulatory bodies. It’s time to think outside the box.
First, intra-day futures and options (F&O) trading should be taxed punitively. This would discourage excessive speculation and help to level the playing field for long-term investors.
Second, brokers already decide who can trade and to what extent. They are closest to the customer, so they should carry all the liability and more responsibility. If a broker encourages excessive leverage, it should be held responsible.
Third, the stock exchanges are aiming to maximize profits. There’s nothing wrong with that, but the way they go about it matters. They often make trading easier to increase volumes, which encourages speculation. This needs to stop.
Fourth, hedging positions should be allowed. This was meant to be the main purpose of F&O trading! We can find the right technology solutions to make this seamless.
Fifth, investor education efforts should be encouraged. We need to combat the appeal of quick profits that F&O trading offers. Perhaps an “F&O Sahi Nahi Hai” campaign could have an impact. More importantly, the way investor education is done, especially related to trading, needs to be completely re-thought.
