Thread.
1/n
Ok, a lot of supposedly smart people are tweeting a lot of irresponsible things post the issue with Karvy. The worst part is these supposedly "knowledgeable" people are creating doubts on successful brokers built on years of hard work without facts.
1/n
Ok, a lot of supposedly smart people are tweeting a lot of irresponsible things post the issue with Karvy. The worst part is these supposedly "knowledgeable" people are creating doubts on successful brokers built on years of hard work without facts.
2/n
1. Labels like full-service brokers, discount brokers, bank owner brokers are immaterial. Would you only deal with a firm if it was only owned by a bank? That's stupid.
2. Ultimately, excess leverage kills most brokers and traders.
3. The issue with Karvy was triggered by
1. Labels like full-service brokers, discount brokers, bank owner brokers are immaterial. Would you only deal with a firm if it was only owned by a bank? That's stupid.
2. Ultimately, excess leverage kills most brokers and traders.
3. The issue with Karvy was triggered by
3/n
the recent SEBI circular which prohibited brokers from pledging client securities.
4. Some of these brokers were in-turn pledging client securities & offering fairly high leverage to clients and eating the differential. The spread between what they charged the client and
the recent SEBI circular which prohibited brokers from pledging client securities.
4. Some of these brokers were in-turn pledging client securities & offering fairly high leverage to clients and eating the differential. The spread between what they charged the client and
4/n
what the NBFC/banks charged them.
5. To put it another way, they allowed clients to buy 10lks worth shares with just 5lks. The difference was funded by pledging the unpaid securities.
6. This was a fairly widespread practice among brokers.
what the NBFC/banks charged them.
5. To put it another way, they allowed clients to buy 10lks worth shares with just 5lks. The difference was funded by pledging the unpaid securities.
6. This was a fairly widespread practice among brokers.
5/n
6. SEBI closed this route post the issues with NBFCs.
7. Now that SEBI closed this route, brokers, if they had to do margin funding, have to purely do on the strength of their balance sheets.
8. So, post the SEBI circular, brokers had to unwind these positions.
6. SEBI closed this route post the issues with NBFCs.
7. Now that SEBI closed this route, brokers, if they had to do margin funding, have to purely do on the strength of their balance sheets.
8. So, post the SEBI circular, brokers had to unwind these positions.
6/n
9. The deadline was September if I am not wrong.
10. Since then we have seen brokers like BMA Wealth, Fairwealth among others bite the dust.
11. So, if you see tweets casting doubts on brokers like Upstox, Zerodha, 5paisa, Fyers, etc, ignore them. They are stupid.
9. The deadline was September if I am not wrong.
10. Since then we have seen brokers like BMA Wealth, Fairwealth among others bite the dust.
11. So, if you see tweets casting doubts on brokers like Upstox, Zerodha, 5paisa, Fyers, etc, ignore them. They are stupid.
7/n
12. Here a few things you can do to keep your securities safe.
13. Never ever trade with a broker that offers 50, 60, even 80X (in some cases) leverages.
14. These brokerages are quite small and a single trader can potentially kill the broker if a Natural Gas like trade
12. Here a few things you can do to keep your securities safe.
13. Never ever trade with a broker that offers 50, 60, even 80X (in some cases) leverages.
14. These brokerages are quite small and a single trader can potentially kill the broker if a Natural Gas like trade
8/n
goes wrong.
15. Advice like stick to bank brokers, top 5 brokers is stupid. Evaluate a broker based on the level of service and products.
16. Always ensure the securities are credited to your demat and not the broker pool.
goes wrong.
15. Advice like stick to bank brokers, top 5 brokers is stupid. Evaluate a broker based on the level of service and products.
16. Always ensure the securities are credited to your demat and not the broker pool.
9/n
17. You can register on CDSL Easi and NSDL E-Speed to verify your demat holdings.
18. If you are savvy, you can also check the financials of brokers, they are public.
19. Just because discount brokers or have low-pricing, doesn't mean they are unsafe.
17. You can register on CDSL Easi and NSDL E-Speed to verify your demat holdings.
18. If you are savvy, you can also check the financials of brokers, they are public.
19. Just because discount brokers or have low-pricing, doesn't mean they are unsafe.
10/n
20. That distinction is gone.
21. Even the brokers including banks have discount like pricing today. That means everybody is unsafe?
In fact, SELECT discount brokers have VERY strong financials compared to full-service brokers.
20. That distinction is gone.
21. Even the brokers including banks have discount like pricing today. That means everybody is unsafe?
In fact, SELECT discount brokers have VERY strong financials compared to full-service brokers.
11/n
21. Do your homework before choosing a broker. Leverage is not the only parameter a broker should be chosen on.
22. And no, none of the stupid shit like these brokers sell data, hunt SL's, prop-trading risks are true. What's same for big brokers is true for small ones.
21. Do your homework before choosing a broker. Leverage is not the only parameter a broker should be chosen on.
22. And no, none of the stupid shit like these brokers sell data, hunt SL's, prop-trading risks are true. What's same for big brokers is true for small ones.
12/12
It takes years of toil and hard work to build a successful business. We should support these champions instead of saying dumb shit to cast aspersions on them.
Imagine if the business was owned by you. How would you feel? Deal in facts, not lies and I head so's.
End.
It takes years of toil and hard work to build a successful business. We should support these champions instead of saying dumb shit to cast aspersions on them.
Imagine if the business was owned by you. How would you feel? Deal in facts, not lies and I head so's.
End.
