Zerodha, one of India’s leading stockbrokers, has announced that it will be discontinuing BTST (Buy Today Sell Tomorrow) trades from June 17, 2023. This decision has been taken in line with the recommendations of the Securities and Exchange Board of India (SEBI), which has been pushing for the elimination of BTST trades.
BTST trades are a type of derivative contract that allows traders to buy shares today and sell them tomorrow. This type of trade is popular among traders who want to take advantage of short-term price movements, but it also carries a number of risks.
SEBI has been concerned about the risks associated with BTST trades for some time. In 2018, the regulator issued a circular that restricted the use of BTST trades. However, the circular was not effective in eliminating BTST trades, and SEBI has continued to push for their elimination.
Zerodha’s decision to discontinue BTST trades is a significant step towards eliminating this type of trade from the Indian market. The decision is likely to be welcomed by investors who are concerned about the risks associated with BTST trades.
Additional details about the discontinuation of BTST trades on Zerodha:
- The decision will take effect on June 17, 2023.
- All BTST orders placed before June 17 will be executed as scheduled.
- After June 17, BTST orders will be rejected.
- Traders who want to take advantage of short-term price movements will need to use other trading strategies, such as intraday trading or futures trading.
Risks Associated With BTST
One of the biggest risks associated with BTST trades is the risk of short delivery. This occurs when a trader who has bought shares today is unable to deliver them tomorrow. In this case, the trader will be liable to pay a penalty to the exchange.
Another risk associated with BTST trades is the risk of market volatility. If the market moves sharply between the time a trader buys shares and the time they sell them, the trader could lose money.
Impact of the Decision
The discontinuation of BTST trades will have a number of implications for traders and investors. First, it will make it more difficult for traders to take advantage of short-term price movements. Second, it will reduce the risk of short delivery. Third, it will make the market more stable, as there will be less volatility caused by BTST trades.
The discontinuation of BTST trades is likely to have a positive impact on the Indian stock market. It will make the market more transparent and efficient, and it will reduce the risk of fraud. It will also make the market more accessible to retail investors, who are often discouraged from trading because of the risks associated with BTST trades.
Conclusion
The discontinuation of BTST trades is a positive development for the Indian stock market. It will make the market more transparent, efficient, and accessible. It will also reduce the risk of fraud and volatility. This is a welcome move by SEBI and Zerodha, and it is a step in the right direction for the Indian stock market.