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Showing posts with the label Margin Trading

What was the badla system: WEEKEND READ | Badla: The rise and ruin of an infamous stock market system

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[hfe_template id='11223'] [ad_1] Synopsis As new restrictions to curb excessive speculation are placed on F&Os, does anyone even remember their precursor? For decades, it was the “Badla” system that fuelled our stock markets, offering traders a way to carry forward trades without upfront payments. While it injected liquidity and amplified profits, Badla also sparked speculation and manipulation because, at its peak, it dominated over 70% of the BSE’s trading volume. But over-leverage and opaque dealings led to volatility and financial crises. In 2001, regulators finally pulled the plug on Badla, forever changing the trading landscape. A look back at a system whose legacy has shaped modern market regulations. The term "Badla”, meaning "carry forward" or "change" in Hindi, perfectly describes this trading practice. Introduced in the BSE, it functioned as a deferred settlement mechanism, allowing investors to roll over trades instead of making i...

Margin trading in Japanese stocks sharply shrinks after market rout

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[hfe_template id='11223'] [ad_1] Trading using borrowed money, or margin trading, in Japan's stock market fell sharply last week as investors were forced to dump stocks during the Nikkei index's biggest fall in nearly 40 years. BY THE NUMBERS Margin trading, which involves using borrowed cash from brokerages to ramp up bets in the stock market, is popular among Japanese retail investors. Margin trading accounts for about 70% of retail trading value, the exchange data shows. The value of shares bought on margin fell by 907 billion yen ($6.15 billion) to 4 trillion yen in the week ended Aug.9, from the previous week's 4.87 trillion yen, according to Japan Exchange Group, which runs the Tokyo Stock Exchange. The amount hit a record high of 4.98 trillion yen in the week of July 26. The Nikkei plunged 12.4% on Aug. 5 in the market's biggest single-day decline since the 1987 Black Monday crash and bounced back 10% the following day. The index fell as much as...