Big Story | Quality Control For Drugs | NDTV Profit
- How can spurious drugs be prevented from entering the market?
- Who should be held responsible for patients' safety?
Public Health Activist Dinesh Thakur and Senior Journalist Prosenjit Datta discuss on 'Big Story'. #NDTVProfitLive
- Who should be held responsible for patients' safety?
Public Health Activist Dinesh Thakur and Senior Journalist Prosenjit Datta discuss on 'Big Story'. #NDTVProfitLive
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NewsTranscript
00:00This is not a new problem, but this is for the first time that the authorities have cracked down on so many units.
00:07The NDTV network decided to pay a visit to some of these units to find out more.
00:13Pantomed, Paracetamol, Antibiotics like Amoxicillin, Vitamin C and Vitamin D3 tablets, Adrenaline injections.
00:29These are some of the medicines which have failed the drug test.
00:35NDTV reporters travelled to some of these manufacturing units in different states to try and find out more.
00:43First stop, Haridwar.
00:45A reporter visited Pure & Cure Healthcare's manufacturing unit which allegedly manufactured Spurious Shell Cal 500 tablets.
00:52Pure & Cure Healthcare is still making these medicines to this day.
00:56There's a common sentiment that these companies should not be spared and proper action should be taken against them.
01:03These companies should not be spared and proper action should be taken against them.
01:07It's a matter of a person's life.
01:10You can see how many big companies are involved in this.
01:16There are other companies as well which have failed the drug test.
01:20It's unfortunate that such companies have been licensed.
01:24Next stop was Mascot Health Series, which is also in Haridwar.
01:29Its quality head and director Jitendra denied any wrongdoing.
01:50Pharmaceutical giants often outsource the manufacturing of their medicines to smaller vendors and contractors across the country.
01:57This is usually where contaminants creep in.
02:00All this simply for a higher profit margin.
02:20The pharmaceutical industry however denies the allegations.
02:28There are only 5 companies in Haridwar that manufacture fake medicines.
02:32The rest of the medicines are NSQ, not of standard quality.
02:37There are 5 companies in Haridwar.
02:39All of these medicines have minor defects.
02:43There are 200 companies in Haridwar that work as pharmaceutical manufacturers.
02:495 of these companies have been licensed by the CDSO.
02:53All of these companies continue to manufacture medicines.
02:58You can see that the CDSO's work is limited to paper work.
03:02It has a negative impact on the quality of medicines.
03:23What measures can be taken to ensure quality control of these drugs?
03:53The latest CDSO raids have raised grave concerns about several common drug formulations that unsuspecting Indians consume.
04:02What do you make of the findings and how do we stop these spurious drugs from entering the market in the first place?
04:09This is not the first time that you've had drugs not of standard quality.
04:15Remember, I've heard one of your reporters talking about spurious drugs.
04:21The definition of a not of standard quality drug in India is different than the definition of a spurious drug.
04:27The list that the CDSO has put out this time with 53 medicines that failed testing,
04:34a large majority of those are not of standard quality drugs.
04:38Spurious has a very different connotation, so let's just be straight about the definitions first.
04:43The question here is that this is not the first time that we found out that a large number of these drugs are failing testing by state and central drug laboratories.
04:54What is different this time is under pressure from people like me and others who have been asking for the names of these manufacturers to be released.
05:04The CDSO has actually put out the names.
05:07In the past, all it used to do was tell us through a similar notification which medicines have failed without telling us who the manufacturers of those medicines were.
05:18The reason you're seeing the outrage that you see right now is because this list actually has names of very large companies.
05:25Your reporting here included visits to smaller and medium-sized manufacturers who are probably not very visible among the consumption of medicines in India.
05:41If you look at that list, that contains a number of very large companies which are household names.
05:47The question you're asking is that how do these medicines enter into the drug supply?
05:52The reason these medicines enter into the drug supply is because the state drug regulators who are responsible for licensing manufacturing facilities,
06:00like the one that you showed me a few minutes ago, they are the ones who are giving these people licenses.
06:05The question is, on what basis are these licenses given?
06:08You've interviewed managers and officers of these manufacturing facilities.
06:17The question that we need to ask is, what is the criteria based on which the state drug regulators of Himachal and Uttarakhand are giving these companies license to manufacture these drugs?
06:29Because in our research and what we've documented extensively in our book, The Truthville,
06:34a lot of these facilities don't even have basic equipment, standards, training to be able to manage the manufacturing of these drugs.
06:44So you'll have to understand, you have to ask the state drug controllers,
06:47what is the basis on which you're providing manufacturing licenses to these companies?
06:53The second question you asked, and correct me if I'm wrong, is that how do we stop these companies from making these kinds of drugs?
07:04Last year, the government passed Jan Vishwas Bill, which is now the Jan Vishwas Act.
07:11In July of this year, the government actually published in the Gazette the proposed rules operationalizing the Jan Vishwas Act.
07:19And in that rule, what the government is doing, which I have written about extensively last year,
07:25is basically compounding the offense of making substandard drugs.
07:29What that means is that they are giving immunity from prosecution.
07:33I wanted to come to that part specifically.
07:37And do you think, and you've just talked about it, part of the problem that is there in India is that we never affix blame.
07:46We conduct these regulatory, we look at the regulation, the regulator goes there,
07:53does an exercise of finding that there are substandard drugs, the list gets published.
07:57There's a hue and cry about it.
07:59But after that, there is a relatively very little follow up.
08:04And the people who are behind these substandard drugs never actually see any sort of conclusive punishment.
08:12It never, it rarely goes into the judiciary at all.
08:15Well, so the data actually is different.
08:20The data is that the drug inspectors do diligently file prosecutions with the district courts and civil magistrates.
08:29Unfortunately, you know how the judicial system works in India.
08:32Even in cases where after great diligence, the drug inspector establishes that the manufacturer and the officers of the manufacturers are culpable,
08:42the judge basically hands a sentence of like, you know, 20,000 rupees of fine.
08:47Despite the fact that in the past, prior to Jan Vishwas, we really had the ability of the judicial magistrates to impose penal punishments, but they never did that.
08:57That's the first issue.
08:59If you do not provide deterrence, if you do not penalize people who put lives at risk by making substandard drugs,
09:08and this has been going on not for the last five or 10 years, it's been going on for 75 years right now.
09:14The question here is, how do you prevent people from making these kind of mistakes again?
09:18Because the judiciary essentially sort of gives these people a pass.
09:21The second question is that people, lay people like you and me and my family in India, we don't raise our voice when these things happen.
09:29This is the first time that you're seeing the kind of outrage that you see.
09:32Go back just a couple of years ago during COVID.
09:37You've seen the kind of medicine that was sold under scaremongering.
09:42Medicines like favipiravir, medicine like ivermectin, which had nothing to do with what, you know, a cure for COVID was.
09:50And these companies made crores and crores of rupees.
09:53There is no accounting for that.
09:55And so, yes, I mean, the drug inspectors go out and do inspections, but they do not tell us what they actually find.
10:03I've never seen an inspection report written by a drug inspector, other than what we had gotten in an RTI Act from Karnataka,
10:13of what the central drug inspector does when it actually goes and inspects these facilities.
10:18All we get to know is that this facility was found to be faunting in terms of compliance.
10:23Why is the inspection record a state secret?
10:27In the United States, when inspectors from the US FDA come and inspect facilities in India in 30 days, they publish the inspection report.
10:34People like me get to know what was wrong with that particular facility.
10:38Why doesn't a drug regulator actually publish these reports?
10:41Why is that a state secret?
10:43You're asking me who's accountable.
10:45The accountability rests with the Ministry of Health and the drug regulator, which essentially is captured by the pharmaceutical industry in India.
10:54India, of course, is also known as the pharmacy of the world.
10:57Now, when reports like this one come out, it obviously does a huge amount of reputational damage to our attempts to continue manufacturing drugs.
11:10Of course, a few years ago, there were reports that came out that suggested that spurious drugs were sold by India to other African countries.
11:19There was a hue and cry about it.
11:22But that kind of reputational damage is something that India cannot afford at this juncture when we are hoping to take a leap forward.
11:33What would you like me to say?
11:34I mean, you've made a statement.
11:36I agree with you.
11:37What would you like me to say?
11:38I would like you to tell us how do we go forward with dealing with this problem?
11:43If we want to keep our, you know, still be the pharmacy of the world and produce drugs that are of international quality.
11:54We do produce drugs of international quality.
11:56The medicine that is exported to the United States and Europe complies with the standards that are applicable in these countries.
12:02It's not that we do not know how to make drugs of good quality.
12:06We absolutely do that.
12:08I live in the United States and 80% of our drug supply is genetic.
12:13And the medicine that I take is manufactured in India.
12:16It is not that we do not know how to make good quality drugs.
12:19We absolutely do.
12:20The question here is that why do we have dual-track manufacturing where we follow one standard when we make medicine for export to the United States and Europe
12:28and a completely different standard when we make drugs sold in India or export to Africa?
12:34The reason that happens is because our regulations are incompetent.
12:37Our regulators are incompetent.
12:39Our regulations are ineffective.
12:41And then the judicial system does not hold wrongdoers to account.
12:45That's as simple as that.
12:46All right.
12:47So what is the way forward?
12:48Do we need more policy to come in?
12:51Do you think that the regulator needs to be made more accountable?
12:56The first thing we need to do is take bills like Jan Vishwas Act back.
13:01Because if you're providing immunity from prosecution to these people who are making medicine that could potentially kill you, what message are you sending to the industry?
13:10What are you telling them?
13:11You're telling them that it's okay for you to make bad quality drugs that kill people and get away by paying a paltry fine of 20,000 rupees.
13:18Is that the message that you want to send?
13:21Why don't we start there?
13:23Why don't we take that bill back?
13:26And introduce something that is more accountable, where if you find medicines of this nature that are actually failing the state and central drug testing laboratories, you file prosecutions against these people.
13:37And make them accountable in the court.
13:39Let them come out and tell us specifically why are they taking shortcuts when these companies, you know, the bigger ones.
13:46I'm not talking about the ones that you showed here in this program, but the bigger ones.
13:50Why is it that they follow different standards when they make medicine for export to the United States and don't follow the same standard when they make medicine for consumption in India with our population?
14:00Why don't you ask them?
14:02Why don't, you know, the ministry or the regulator, the courts, ask them to come on record and explain this to us, the lay people of the country?
14:09Right. All right.
14:10Thank you very much, Mr. Dinesh Thakur, for joining us on the broadcast.
14:14So you are, of course, talking about the fact that there is a problem with the regulator and with us following up with action.
14:23Thank you for joining us on The Big Story.
14:25You're welcome.
14:27All right.
14:30Prasenjit Dutta, a senior journalist who has written about how substandard drugs carry a huge economic cost, is also joining us on The Big Story.
14:40Hi, Prasenjit.
14:41Thank you very much for taking out the time to speak to us.
14:44To begin with, now, the CDSCO came out with a list of about 50 drugs.
14:50But apart from that, there have been several instances in the past where we've exported medicines abroad and questions have been raised about their quality.
15:00Now, how do you see this constant battle that we have to face with substandard and low quality drugs?
15:09Yeah, thanks for inviting me, Nupur.
15:12Essentially, the problem is very simple.
15:15See, when we export drugs to the US or any other developed country, their regulators make sure that the manufacturing facilities which are making the genetics that go there are of high quality and follow good manufacturing practices.
15:35Whereas, when we export to smaller countries, quite often nobody is checking the quality of the drugs that are going.
15:47If we are exporting to countries in Africa, neither the Indian regulator is checking whether all those drugs are of the high quality that need to be exported.
16:00And those countries obviously have lax regulators too.
16:04So, what happens is that, particularly in the last two years, there have been a number of cases where our cough syrups have proved to have killed many children.
16:16Our drugs have been substandard and have been rejected if they have been checked.
16:21So, this is a grave danger to the pharmaceutical industry's reputation as a whole.
16:29Especially since we are one of the largest manufacturers of genetics in the world today.
16:38Right, absolutely.
16:39So, obviously there are two parts of this.
16:42There is the regulation part of it and the other side of it is following it up with action.
16:48Now, often these raids are conducted and we don't see enough action in the aftermath to a. reassure the public that this is an issue that is constantly being dealt with and b. to send out that message.
17:04See, the policy makers and the regulators need to take this far more seriously than they are doing now.
17:11For example, even if somebody is caught supplying substandard drugs, generally he or she gets away with a slap on the wrist.
17:24Nothing more.
17:26The maximum fine they may pay after six months or eight years or several years of litigation would be barely 20,000 rupees or 30,000 rupees.
17:37They are not banned for life.
17:38They don't go to prison.
17:41Nothing happens to them.
17:43At the same time, we do not have any laws which force them to recall even the batches which are found to be defective or substandard.
17:55The CDSCO will fairly regularly monitor or pick up samples and test them.
18:07This is not the first time.
18:09This is the first time that it has come so much in the papers, but practically every other month, you will read about drugs samples which have been found to be substandard.
18:21Now, when they say substandard, it doesn't say that whether they contain even 0% of the drug that is required.
18:30And then there is no further action.
18:33I mean, that entire batch doesn't get condemned and recalled.
18:38No manufacturer or, for that matter, marketer of that drug will be told that, okay, if this happens a second time, you will lose your license.
18:49It is just, you know, life goes on as normal.
18:54Nothing happens.
18:56Right now, this also is associated with a huge economic cost, which low quality and substandard drugs actually attach to themselves.
19:08One, of course, is reputational damage that a country like India, which is known as the pharmacy of the world, can not essentially deal with at this stage of our economic growth.
19:22What do you think needs to be done to ensure that we can limit this damage now that reports like this keep coming out?
19:30And also explain to us, what are this attached damage that doesn't stare us in the face, but it's there?
19:40See, the greatest damage that happens internally in our domestic, let us say, even if the 10% of the drugs are not good, they cannot cure your disease.
19:53Instead of having a fairly mild fever, which goes away in two or three days of taking paracetamol, you could be laid on your bed for 14 days, 15 days, because the paracetamol itself is false or substandard.
20:10It is much worse if you have got a malaria or a viral attack, or any sort of disease which requires a strong antibiotic.
20:22You take the antibiotic, you think that it is not working, doctor gets puzzled, he tries something else.
20:30You take that too, if you're lucky, that will be working on you, or it might not.
20:35So from your point of view, you're spending a lot of unproductive time.
20:41You cannot work, you are spending lots on doctors and on drugs, but they are not curing you.
20:51From a company's perspective and from the country's perspective, all these show up in little ways in the productivity lag that we face with other countries.
21:03India is known as having low productive workers, then there is another danger.
21:11The other danger is that suppose you have taken antibiotics for a long time, which are substandard, and they are not working.
21:20At some point, you are facing a really serious antibiotic resistance, which will then make it impossible for even the right doses or stronger doses of antibiotics to work on any disease.
21:37So people will develop immunity and these are all huge problems which are staring us in the face.
21:44Then there is, of course, the debt problem.
21:47There are so many poor people who need to take more money, or even middle class.
21:53They are hospitalized, their treatment is prolonged, they spend money, they are in debt, they go bankrupt.
22:01So these are all things which are huge problems which the government does not seem to pay much attention to.
22:08The regulator needs to understand that you could grow faster, your industries could be more efficient, your people could be more productive,
22:18if people got the right drugs at the right time instead of substandard drugs, which don't cure them when they have a fever or a disease of some sort.
22:33Right, so what you are suggesting is that this is a much larger problem that needs to be dealt with head on.
22:41Thank you very much, Prasenjit, for joining us.
22:44Yeah, thank you.
22:48Well, with that, it is a wrap on The Big Story.
22:51Thank you very much for tuning in, but stay with us on NDTV Profit for more.
23:03The Dabbawalas, a symbol of Mumbai's enduring spirit, capture the imagination of the city like nothing else.
23:10Long-standing, hard-working, and with tireless dedication.
23:18This 130-year-old institution, which has been delivering lunch boxes on bicycles to the working class of the city,
23:25will now experience a sense of ease, thanks to the introduction of sustainable mobility through e-bikes into their daily routine.
23:55There has been a lot of change in the way we live.
23:58If we walk on the road today, there is a huge difference between 20 years ago's Mumbai and today's Mumbai.
24:04There is a huge crowd of people and vehicles in Mumbai.
24:08Because of this, the way we deliver lunch boxes on time in Mumbai, there is a lot of obstruction.
24:14We have to face a lot of stress and problems.
24:19There is a lot of traffic.
24:20But we are working very hard to maintain our way of delivering lunch boxes on time.
24:32Baatavaran, an NGO which has been a strong advocate for clean air in the city,
24:37has provided 25 state-of-the-art e-bikes to the Dabbawalas along with IAFL Foundation,
24:44CSR Wing of IAFL, one of the players in the financial service space.
24:48They believe that the Dabbawalas have the potential to be much more than just different servers
24:55and play an active role in promoting sustainable transportation.
24:59In Mumbai, for the last 134 years, the community has been serving by cycling, walking or by local trains.
25:16They are the real champions of climate action.
25:35The Dabbawalas feel the e-bikes will greatly assist them in their food delivery.
25:39In our society, we do not use any vehicles that spread pollution in our total delivery system.
25:50So, the e-bikes that they have given us, can help us in our work and we can go on a fast track.
26:02The number of Dabbawalas dropped drastically after the COVID-19 pandemic.
26:07With this initiative, the hope is that they will be restored to their former glory.
26:14We have given these e-bikes which are environment friendly and this will create less carbon footprint.
26:25The expectation is that many other last mile delivery systems will follow this initiative,
26:32paving the way for a better, more sustainable future in the city.
26:38Many companies deliver their products to our homes within minutes.
26:49This is a major source of air pollution.
26:54This is a major source of air pollution.
26:57This is a major source of air pollution.
27:08For over a century, the Dabbawalas from Mumbai city have been a symbol of eco-friendly practices.
27:14Now, with the introduction of e-bikes for them, it not only makes their job easier,
27:18but also helps them continue the cause of a clean air Mumbai in the future.
27:23More importantly, it spreads an important message that a change does not necessarily come at the cost of environment.
27:30With Cameraperson Hemant Mohite, this is Anuj Rayate reporting from Mumbai for NDTV.
27:35Well, we've got some news coming in.
27:38The much awaited overall of the F&O trading criteria has come in.
27:43Now, we understand that SEBI has put in place curbs for trading to essentially tame the trading frenzy.
27:50Joining me on the broadcast right now is Sajid Mangat.
27:53He has more details of what has come in.
27:55Sajid, take us through what we are learning.
27:58Yes, that's right.
28:00Finally, the circular which we were talking about since morning has been notified by the market regulator.
28:08It's pretty much in line with the consultation paper which was voted by the regulator in July.
28:15Based on that, quite a few of the recommendations have gone through
28:23and they have basically decided to implement the entire circular going forward.
28:30Exchanges will now have to implement it in a phased manner because there are already existing contracts in place.
28:37So, in a phased manner, they will bring in all the changes which includes a couple of things like margin,
28:46extreme volatility margins which will be there, intraday margins which have been there.
28:51So, increasing the size of the contract because currently the contracts are between 5 to 10.
28:57It will go up to 20 to 30 lakhs there which basically means that anyone who wants to buy one contract going forward
29:04will have to pay up at least 3 to 4 times what he or she is paying now for index options contract.
29:14The bigger thing which is there is that now the regulator has limited the weekly option to one benchmark index in each exchange
29:25which basically means that 50-50 will be one of them from NSE
29:29and the Sensex option which is an option will be one which will be there from the BSE.
29:36There is no limitation on the index as such for monthly options but weekly it has now been reduced to one.
29:48Remember, we were trading almost one expiry a day.
29:53On every day of the week, there used to be one index which used to expire.
29:58That used to create volatility and speculation.
30:01The purpose of the regulator is to bring down that volatility and speculation
30:05and reduce the kind of exposure that retail investors have in this market.
30:11There has been already a couple of surveys in place which has spoken about the kind of losses retail investors have taken
30:17as a result of the exposure to F&O futures and options market.
30:22It is pretty much in line with the thing.
30:26There was some kind of apprehension yesterday when the board meet happened
30:32and the release did not have anything on the F&O curves.
30:36But as we said in the morning, the curves will come in because it is part of the circular
30:42and the circulars are not taken to the board for approval.
30:45It is an administrative process and we will soon notify the survey.
30:50As you are pointing out, this is quite in line with what we were expecting.
30:55We are given to understand that it comes in place from November.
30:59How do you see the impact of this now going forward?
31:03That's true.
31:05Just to give a perspective to all our viewers, there are already contracts in place.
31:10What the market regulator is saying is that they do not want to do it in one go
31:16because people have existing positions which they have already taken.
31:20It comes into play more from November.
31:23There are already three or four contracts, weekly contracts, which have come in.
31:27The weekly contract from the month of November is when it will get implemented in this fashion.
31:33There will be a notification that will come in from the stock exchange soon
31:37which will elaborate more on the strike prices, more on the size of the contract.
31:47All this will be more clear because it is up to the stock exchange to implement that.
31:55As you said, this entire thing will be introduced from November 20th onwards.
32:00There is a month, month and a half before that can happen.
32:06All right.
32:08We will have to wait and watch for whether SEBI's aim of essentially discouraging retail investors
32:15actually these new measures hit the nail on the head or not.
32:20I am going to try and go across right now.
32:24We will go back to Rajesh Pallaviya in just a bit.
32:31But as we were pointing out earlier, Sajith,
32:36obviously the aim for SEBI right now is to make sure that they are able to discourage retail investors
32:42who were losing a lot of money in F&O trading.
32:45Do you think that this perhaps is going to deal with that problem?
32:51See, what we have seen from various reports and surveys
32:58and the National Stock Exchange and SEBI in various reports have mentioned
33:02that the average ticket size for people trading in options,
33:07especially the weekly option, is around Rs 6,000 or so.
33:11That is something which is a cause of concern for the retailers
33:16because that brings in more speculation, brings in more investors
33:21who are not educated enough to deal with complex products like futures and options
33:27and nearly 93% of them end up losing money because of the investments.
33:33And that is not a healthy sign for the market as well
33:36because when you lose money in the market, you lose confidence in the market
33:40and then you do not invest in the market.
33:42The regulator wants it very clearly that it should be a very educated call
33:48to come and invest in the market.
33:51They encourage investment into the cash market where you can buy stocks.
33:56They also are not opposed to investing in the F&O market
34:01provided you have the ability to understand the market and trade accordingly.
34:06One thing is very clear from the surveys is that the more time you spend in the market
34:12is when you get to reduce your losses.
34:16That is the case both in the cash market as well as in the F&O market
34:20but the time spent in the market is when you get to learn how to trade in the market.
34:25The other concern which has been brewing from not only the regulators
34:31but also from the finance ministry is the shift of household savings
34:36from bank deposits to the futures and options market.
34:41That is something concerning for the regulator as well.
34:49So far, if you see a year back, the market regulator was not so concerned about it
34:57because investing is a decision which is left to the individuals.
35:01The market regulator was only concerned with respect to the market risk
35:06and whether it creates a systemic risk or not.
35:08The macroeconomic changes and the systemic changes which is coming in
35:13is going to disturb the market.
35:15Sajid, let's just get in a word from Rajesh Pallaviya who is joining us on this.
35:20Rajesh, finally we are seeing the curbs that have been put in place by SEBI.
35:26Obviously, the aim was to curb retail investors from going into F&O.
35:32How much of an impact do you think this will have?
35:34So, definitely there was a concern for the retail investor
35:38to protect the interest of the retail investor.
35:41These major 3-4 curbs they have already in this circular.
35:47So, the first one is the major activity which was happening on the daily option expiry
35:54which is happening on the exchanges.
35:56So, per exchange, one weekly expiry that will also down these kinds of speculation activity
36:04especially on the day-to-day basis for the indices
36:08which retailers are participating in this market.
36:11And again, the lot size has also increased to the 15 lakhs.
36:16This will also restrict them to participate those who are having low capital base.
36:22So, basically these measures which they have announced in this circular
36:28is clearly to protect the interest of retail participants,
36:32those who are novice in market and those who are not having that much of experience
36:39in the derivative market and they are just playing the market as a speculation activity on expiry days.
36:45So, this will curb those kinds of activities.
36:49Yes, definitely it will give impact to the market on an immediate basis.
36:54Maybe we can see some volumes to be shrink for the options trading especially.
37:01But yes, it will protect the retail investors from losing the money
37:07which they are losing on a daily basis or majorly the concern is to protect their interest.
37:16So, I think this will help these two major initiations.
37:23One is one exchange, one weekly expiry and second one is to increase the lot value also.
37:31And now they will charge the upfront premium also even on the selling of options on expiry
37:38that they will increase the margin by 2%.
37:41So, this will also restrict some of the retail participants,
37:47those who are just playing the writing of option just to pocket the premium.
37:53So, I think majorly the margin requirement as well as the deployment of capital
37:59has been increased by putting all these measures.
38:02That will really help the retail investor to protect by losing the money.
38:11So, I think these measures will give impact on the market on an immediate basis
38:19to dry down some of the volumes on an immediate basis
38:22and the activity and participation will go down.
38:27Rajesh, the regulator has given a glide path to implement all these measures.
38:34It goes all the way up to April 1st, 2025.
38:38Do you think that's a fair way to bring in all the curbs?
38:43Because your inter-day monitoring of position limits, all those come into effect from April 1.
38:48The removal of calendar spread, treatment and upfront collection of options premium
38:54comes into effect in February.
38:57It's only the short-term measures like the contract size,
39:01rationalization of weekly index derivatives and increase in deal risk coverage
39:07which is extreme loss margins that comes into effect on November 20th.
39:11So, I think this one exchange one weekly expiry will take effect from November itself.
39:19And I think the calendar spread and other things will take effect from the FAB 2025.
39:26So, I think they have given a sufficient window
39:30because the major participation in these kind of spreads and other things
39:34is done by those who are having prop books or algo trades,
39:42those who are running their strategies by doing this kind of calendar spread
39:47to get the benefit of margin.
39:49But retailers generally play in the market on the plain vanilla side.
39:53They are just option buyer or seller.
39:56They are doing one leg strategy generally.
39:58But this calendar spreads or these kind of strategies is majorly run by those
40:04who are seasoned trader or prop desk or algo trades or strategies,
40:08those who are deploying on the market.
40:10They are getting the benefit of this calendar spreads.
40:13But now by removing this, I think it's a level playing field for everyone
40:19and they will require higher margin to deploy if they want to do these kind of strategies.
40:24So, I think removal of this calendar spread benefit will have an impact on the margins.
40:32So, I think that will discourage the benefit of this calendar spread.
40:37So, I think again it will be a level playing field between the retailers
40:42as well as those who are having high capital base.
40:46So, Rajesh, you think that these measures will go a long way.
40:50Let me also bring in Mr. Sunil Subramaniam on this.
40:53Hi Sunil, how do you see these measures?
40:57Now the basic aim of SEBI was to curtail retail investors from losing money.
41:02Do you think that these measures will essentially provide for that?
41:07Yes, I think so.
41:10I think they will work towards that.
41:12And you will see that retail will probably...
41:16You know, you can connect this to regulation around the new investment strategy
41:21that MS can launch where naked shots are going to be allowed by fund managers.
41:26So, this will probably drive them to a more regulated piece of the market
41:30rather than trying to do on their own.
41:32So, I think on the whole it's something that will protect retail investors.
41:36All right. Sunil, stay with us.
41:39I think we've also got Agam Vakil joining in with a question for you.
41:44Agam, I think you have a question for Mr. Subramaniam.
41:47Please go ahead.
41:49Right, Mr. Subramaniam.
41:51You know, my question actually is to do with the kind of impact
41:54that we may see on listed players.
41:56One of them, of course, is the BSE,
41:58which in fact did see a considerable rise in not only its revenue and bottom line,
42:03but we've also seen a lot in terms of price action.
42:06And Mr. Subramaniam, again, I understand if you can't be stock specific.
42:10But, you know, in general, in terms of the kind of impact
42:14that it can have with respect to revenues for exchanges,
42:17it could be substantial because ever since we've seen
42:20that introduction of weekly options expiries,
42:23we've also seen a little bit of surge in revenues.
42:26That's one.
42:28And the second impact, of course, is the discount brokers.
42:30There are several out there which, in fact, have seen, once again,
42:35an increase in revenues on account of the churn in activity that we've seen.
42:39Going forward, do you think that there could be some amount of weakness
42:43that we could expect on not just exchanges,
42:46but brokers as well from the listed space?
42:49Yeah, I agree with you.
42:51That there will be definitely impact.
42:53In fact, Mr. Kamath of Viroda had hinted at this
42:56in the quarterly earnings thing, and he was discussing it.
42:58He said that, look, I don't expect this to last for very long
43:02because I expect that we need to come out with strong measures.
43:05And, you know, these brokers were actually making money
43:07off the effendo trade because they're offering free,
43:10otherwise, broking things.
43:12So, definitely, I see an impact on the margins
43:15for both discount brokers as well as exchanges.
43:18To what extent the market prices will reflect that is anybody's guess.
43:22But, definitely, there will have to be a re-rating of these.
43:25I agree with you there.
43:29Mr. Subramaniam, going forward,
43:31what are the kind of measures that a lot of these exchanges
43:38and brokers will have to take in order for them to cover up these losses?
43:43There's plenty of innovation in terms of the kind of products
43:46that are putting up, but it just seems like all the products
43:50that are being introduced is to largely entice
43:53the speculative corner of the market participants
43:58at the moment.
44:00But I'm sure that can be plenty which can be done going forward
44:03in terms of investments as well.
44:05At the end of the day, how do you also see that the foreign investors
44:09will look at this development?
44:11Because in many of these developed markets,
44:13we do see a relatively free-flowing take on the derivatives.
44:19In fact, leverage potentially can be taken to infinity.
44:24How do you think the foreign investors will see this?
44:27I think the short-term foreign investors will definitely be concerned
44:31because this will impact liquidity in the market.
44:33If a significant chunk of retail investors are going to be
44:36leaving this space in the market,
44:39so their ability, they will factor in certain extra caution
44:43on the ability to sell.
44:45So what will the losses be, the transaction cost be
44:48when they come to sell or do a counter trade?
44:51So definitely there will be some reassessment.
44:53But I think overall, if you saw,
44:54these prop books of these FIIs have been making a lot of money.
44:58So just a reassessment there.
45:00But I can't say that it will be without impact.
45:02Definitely there will be an impact on them
45:05in terms of the liquidity in the Indian market,
45:08the factor that they put in to correct for that,
45:12compared to other emerging markets.
45:14Definitely there, India would come off a little bit worse
45:17at this point in time compared to what it was before this regulation.
45:20Sunil, one question from my end.
45:24Do you see now that there would be a significant decline
45:29in the way the retail participation,
45:31retail individuals participate in this market,
45:33given the fact you have tightened the norms
45:36with respect to size of the contract,
45:38inter-day margins, extreme loss margins,
45:42and all other measures which have been taken.
45:45Will it dissuade retail investors from coming into the F&O market?
45:49I would like to take the answer for this
45:52from a correlation to a completely different industry,
45:55and that's the gambling industry.
45:57I have seen in Singapore, where I am currently based,
46:01that no amount of these restrictions prevents a gambler
46:05from reducing his game.
46:07The gambling instinct will come in.
46:09So I don't think it's just their cost,
46:11and their losses will probably go up,
46:13but they can't be prevented from taking these funds.
46:15So I don't expect any significant drop there,
46:18but definitely because of these,
46:20their costs and their losses will go up.
46:22It's just a game.
46:24So essentially if you look at these,
46:26I think the market frequently uses the term investors
46:28for these people.
46:30I don't think the investors are speculators,
46:32as you rightly put it.
46:34And so for a speculator,
46:36it's always a risk-reward play.
46:38Now the costs have gone up,
46:40so you'll expect a higher reward,
46:42and its trades will be accordingly that way.
46:44So I actually expect that they will now take
46:46even more risk to compensate for these additional costs.
46:48So the gambler's instinct will never go away.
46:49So, you know,
46:51if you can bring in some context
46:53to what is the kind of dynamic change
46:56that will happen now to the entire broking industry,
46:58because the entire discount broking industry
47:01flourished in the last four to five years
47:04because of the kind of inflow
47:06of new investors coming into this market,
47:09and especially into the F&O market.
47:11Do you see now some consolidation happening
47:14within the industry as a result of this hit?
47:16I would expect that in the natural course of time.
47:19Because, you know,
47:21obviously the kind of margins
47:23and they've been running on a fabulous ride,
47:26I don't think that was sustainable.
47:28And to the extent that the market
47:30assumed that it was sustainable,
47:32there will need to be a correction
47:34in terms of their re-rating.
47:36But I think that there will be consolidation
47:38because ultimately now it will become
47:40more of a volume game.
47:42The only way we can compensate these losses
47:44is by increasing the scale.
47:46So I expect some amount of M&A to happen here
47:49so that the big scale players
47:51can then manage these things.
47:53So yes, I do think that there will be consolidation
47:55and some amount of M&A here.
47:58All right.
48:00All of you gentlemen do stay with us.
48:02Let's also bring in Charu very, very quickly.
48:04Charu, obviously the aim of the regulator
48:07has been to curb a lot of retail investors
48:10who have burnt their fingers from doing more so.
48:13Now these regulations, I understand,
48:16come into effect on the 20th of November?
48:19Yes.
48:21So tentative dates have been given
48:24for all the regulations that have been brought in
48:26in the circular from SEBI.
48:28Upfront option premium collection
48:30will be applicable from February 1, 2025.
48:33Then no calendar spread benefit on expiry day,
48:35which means that expiring contracts
48:37will be starting from February 1, 2025.
48:40Then you have intraday position monitoring.
48:41Exchanges will monitor positions
48:43at least four times daily from April 1, 2025.
48:46Then penalty for intraday breaches.
48:48Penalties for exceeding limits during the day
48:50will match the end of day penalties.
48:52And increased contract size.
48:54This is the most important one.
48:56The minimum contract value for index derivatives
48:58will be raised to Rs. 15 lakhs
49:00starting November 20, 2024.
49:02Earlier this was only 5 to 10 lakh
49:04and it was last updated in 2015.
49:06And now we have a much more increased contract size.
49:09All right.
49:11As you are pointing out,
49:13these hopefully will deter
49:15some of these retail investors.
49:18Let's go across very quickly
49:20to Mr. Ashish Rathi
49:22who is the whole-time director of HDFC Securities.
49:24Mr. Rathi, good evening.
49:26Thank you for joining us.
49:28What do you make of these measures
49:30that have been put in place by SEBI?
49:32Do you think that they will be effective
49:34in deterring retail investors?
49:36Hi, good evening.
49:38Ashish here.
49:39The final circular is in line
49:41with what was there in the discussion paper.
49:44Obviously, the discussion paper of SEBI
49:46had seven points.
49:48I think the one point they have
49:50not put it in the circular
49:52which is pertaining to strike prices.
49:54So all the other six points
49:56they have put it in the circular
49:58along with dates for implementation.
50:00What I can see is
50:02the weekly expiry
50:04which is now restricted.
50:06I think that definitely will have
50:07a dent in terms of volume
50:09and the increase in margining
50:12that they have proposed on expiry date
50:15and plus intraday also
50:17upfront collection of options margin.
50:20That definitely also will have
50:22an impact on retail volume
50:25is the understanding that we are getting
50:27as of now.
50:29But we will have to wait and see
50:31once these get implemented.
50:33That's my viewpoint.
50:35Ashish,
50:37when I was asking
50:39I was checking with Sunil
50:41as well on this.
50:43How do you see the brokering industry
50:45now coping with these new dynamics
50:47because there will certainly be
50:49a decline in the volumes,
50:51daily volumes coming in
50:53once this entire framework
50:55comes into implementation.
50:57So how do you see brokering industry
50:59managing this hit?
51:04Rajesh?
51:06Rajesh, can you answer this question?
51:09Definitely,
51:11it's going to give impact
51:13to the brokering industry also
51:15especially
51:17the discount broker
51:19because the changes
51:21in the slab structure
51:23that has also given the impact
51:25to the discount broker
51:27which has implemented
51:29for a very long time
51:31and that is
51:32the discount broker
51:34which has implemented
51:36from the first talk of October
51:38and again
51:40these new measures
51:42which the CB has announced today
51:44will also going to
51:46hit in a big way
51:48to the discount broker
51:50or those who are having
51:52very low brokerage structure
51:54because the major F&O volume
51:56and participation on options
51:58were happening
52:00at those kind of brokers
52:02like option trader
52:04and where they have
52:06very low cost
52:08they tend to
52:10take a big position
52:12in the market
52:14just in anticipation
52:16to get out from those trade
52:18quickly once they are
52:20above the breakeven point
52:22of their cost
52:23plus their premium.
52:25So this tends to
52:27increase the volumes
52:29where they have
52:30very low cost
52:32when they execute the trades
52:34so I think this is going to
52:36impact on
52:37those kind of brokers
52:39definitely it will
52:41have an impact
52:43to overall volumes
52:44of the exchanges also
52:45because
52:46a lot many benefits
52:50Rajesh
52:52I am sorry to butt in here
52:53I think we have
52:54Sandeep Parekh as well
52:55from Fintech Law Advisors
52:56Sandeep
52:57how do you see this regulation
52:59in light of the fact
53:01that there is
53:02a broader debate
53:03which is going on
53:05on the F&O
53:06and the kind of
53:07retail participation
53:08that is going into this sector
53:11Yeah hi
53:12so I think
53:13it will have
53:15fair amount of impact
53:17on the
53:18trades which are going to
53:19happen from
53:20November onwards
53:22essentially I think
53:24they are implementing
53:25all the recommendations
53:26which were already
53:27in public domain
53:29and which were recommended
53:30by the committee
53:31including
53:32higher up front collection
53:34of premium
53:36removal of
53:37some of the
53:38expiry dates
53:39weekly auctions are
53:40restricted
53:41contract size are
53:42increased
53:43so I mean basically
53:44it's a means
53:45of putting
53:46sand in the wheel
53:47and I think
53:48the idea is
53:49to kind of
53:50protect the investors
53:51from themselves
53:52and I think
53:54they are not doing it
53:55by saying
53:56this is
53:57making much more
53:58expensive
53:59and more restrictive
54:00to trade in F&O
54:03Do you think
54:04more restrictive
54:05actions can follow
54:06on this
54:07given the fact that
54:08some of the
54:09panelists are saying
54:10that even though
54:11you are going to
54:12increase or make it
54:13difficult for the
54:14retail investor to
54:15come into this
54:16segment
54:17if someone wants
54:18to do speculation
54:19or gambling
54:20as they call it
54:21they will continue
54:22to do so
54:23So I don't
54:24expect anything
54:25that this is
54:26exactly what they
54:27proposed earlier
54:28and this is what
54:29they are implementing
54:30So I think
54:31it's reasonably
54:32clear that
54:33nothing else is
54:34now going to come
54:35for
54:37you know
54:38increasing the
54:39restrictions
54:40I think this seems
54:41to be it
54:42but I mean
54:43it's going to be
54:44implemented over
54:45the next month
54:46or so
54:47so you know
54:48we'll get to
54:49see
54:50I guess
54:51pretty shortly
54:52you know
54:53what the impact
54:54is going to be
54:55on the actual
54:56volumes of the
54:57market
54:58You know
54:59Ashish
55:00can you come
55:01in here
55:02I was asking
55:03you about
55:04the kind of
55:05impact that it
55:06would have
55:07on many
55:08of the
55:09brokers
55:10What is
55:11the kind of
55:12thing that you
55:13see on the
55:14top line
55:15and the
55:16EBIT levels
55:17for many of
55:18the brokers
55:19See
55:20it will be
55:21the measures
55:22are going to
55:23get implemented
55:24over a period
55:25of time
55:26and where
55:27the dependency
55:28on brokerage
55:29is very high
55:30on derivatives
55:31and as the
55:32volumes and
55:33derivatives
55:34are bound to
55:35get a bit
55:36lowered with all
55:37these restrictions
55:38right now
55:39we don't have
55:40an estimation
55:41of any number
55:42how which will
55:43impact
55:44but definitely
55:45if we expect
55:46a 20% dip
55:47in volume
55:48which we will
55:49have to see
55:50obviously
55:51how it goes
55:52but definitely
55:53if we expect
55:54a 20% dip
55:55by 20%
55:56volume
55:57so it will
55:58run in conjunction
55:59with whatever
56:00the volume
56:01dip happens
56:02in derivatives
56:03It's coming
56:04on the back
56:05of multiple
56:06things which
56:07have been put
56:08in place
56:09from October
56:101
56:11from today
56:12as well
56:13you have the
56:14STT changes
56:15which is
56:16coming in
56:17which increases
56:18the entire
56:19cost for the
56:20investors
56:21So
56:22are you able
56:23to bring
56:24down
56:25the speculation
56:26that we have
56:27seen
56:28or the kind
56:29of interest
56:30that we have
56:31seen from
56:32the newer
56:33investors who
56:34are coming
56:35into the
56:36market?
56:37So
56:38yes
56:39I think
56:40in terms
56:41of transaction
56:42cost
56:43what has
56:44happened
56:45previously
56:46is we
56:47have
56:482-2
56:49label
57:50so
57:51we
57:52have
57:532-2
57:54label
57:55so
57:56we
57:57have
57:582-2
57:59label
58:00so
58:01we
58:02have
58:032-2
58:04label
58:05so
58:06we
58:07have
58:082-2
58:09label
58:10so
58:11we
58:12have
58:132-2
58:14label
58:15so
58:16we
58:17have
58:182-2