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CA trading in derivatives

Sri Snigdha (Articles Assisstant) (499 Points)

08 September 2022

are chartered accountants holding COP allowed to trading in derivatives like f&o?

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8 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177896 Points)
Replied 08 September 2022

Yes,

CA in practice allowed to do Derivative transactions if done in individual capacity.

You will be happy to note that the ESB and Council has passed an Item that:

Derivative transactions are not business activity and would therefore not be deemed as prohibited from the standpoint of members in practice undertaking the said activity in their individual capacity (and not in a professional capacity).

However trading in commodity derivative is not permissible.

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Eswar Reddy S (CFO- at NHTF) (58270 Points)
Replied 08 September 2022

@ Sri Snigdha ,

You can't do advisory services in F & O to clients.

But you can do trading in F & O on your own..No restriction

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Sri Snigdha (Articles Assisstant) (499 Points)
Replied 08 September 2022

Thank you soo much for the replies. but while filing the MEF, should the derivative trade turnover should be shown apart from the professional income as the part of P&L?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177896 Points)
Replied 08 September 2022

No. It is being treated as investment in individual capacity and not business income,

2 Like

Sri Snigdha (Articles Assisstant) (499 Points)
Replied 08 September 2022

Lets say the amount invested was 20lac with that the f&o intraday trading turnover was around 1cr during the year and a loss of 2lacs including brokerage of 50k. so this should be reflected in balance sheet? But the trading in f&o is a non speculative business income?

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177896 Points)
Replied 09 September 2022

1. Yes, the loss will get reflected in financial statements.

2. F&O trading is non-speculative business.. while intraday trading is speculative business.. & our topic is on F&O transactions i.e. NON speculative business....

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Sri Snigdha (Articles Assisstant) (499 Points)
Replied 09 September 2022

Hello sir, can you please guide on intraday F&O transactions? If the intraday F&O transactions should be shown as the part of p&l, then the turnover would be professional gross income and intraday f&o turnover?