MTM verification| To fake screenshots, small investors are most vulnerable: Sensibull's Abid Hassan

Traders can save the MTM statement and share it the next day too, Sensibull's founder Abid Hassan.

With interest in trading catching like wildfire, many scamsters without any understanding of the subject are selling courses to a gullible public. These scamsters promote themselves by flaunting the marked-to-market (MTM) statements of their trading accounts, which are essentially screenshots that can easily be photoshopped. Aspiring traders, impressed by these fake statements, sign up for classes and get duped.

Last week, options-trading platform Sensibull came out with a digital tool that can help verify an MTM statement (informally called the P&L screenshot) using data from a trader’s broking platform. This feature became popular and people are now pushing traders to get their statements #VerifiedbySensibull.

Is verification a good thing? One section backs it fully, another says it’s a good first step but not a perfect solution, and a third is vociferously against it.

Also read: MC Explains: The (fake) P&L screenshot debate that has the trader's divided

In an interview with Moneycontrol, Sensibull’s founder Abid Hassan spoke about how the idea was conceived and addressed some of the concerns of traders. Edited excerpts:

Did you think that this would catch on so fast and so widely?

Never, I didn’t think this would become so big.

Why did you think this feature was essential?

For some reason, last May, when I had hardly any presence on Twitter with around 5,000 followers, I started noticing a lot of people selling courses. Entry-level courses can sell for Rs 5,000 to Rs 6,000, so even if you sell them to a 100 people, you make Rs 5 lakh to Rs 6 lakh. On Telegram, there are hundreds of such groups with thousands of people.

To become credible enough to start a group, the easiest way is to advertise through social-media posts of (mark-to-markets or MTM) screenshots (that reflect profitable positions or trades). These screenshots can be photoshopped. Also, scamsters can trade in two accounts—one with a lot of capital and one with a small capital. Then, they share the screenshot of the account with the larger capital and claim that the profits were made in the one with the smaller capital, to make someone with a smaller capital believe that they too can make such extraordinary profits (if they learn from this trader).

With all of this messaging with these screenshots, these scamsters start selling a course or start a paid group on Telegram, and they largely target the smaller, beginner investor.

Why the smaller investor in particular?

If someone has a lot of money, then you can sell them spectacular but realistic returns. But that doesn’t work with smaller investors, who want unrealistic returns. For example, if you promise someone with Rs 1 crore a 30 percent return every year, then after tax they get 20 percent, which is about Rs 20 lakh, which is spectacular and which many PMS funds can deliver.

But if you go to someone with Rs 1 lakh in their account and say that you will give them the same returns, which would translate to Rs 20,000 after tax a year or Rs 1,700 (approximately) a month then this smaller investor won’t be interested. The smaller investor is looking for doubling their money or big dhamaka returns, and is therefore vulnerable to greed and these scamsters.

India is an aspirational country and therefore there is a huge market for these scamsters.

Which are the channels that they use to run this scam?

These screenshots are posted across various channels, mainly Twitter, Telegram and YouTube.

So how will this verification feature work?

When a trader makes a request, we will take a snapshot of their statement from their broker’s backend. It will carry that time stamp. (A link will be generated that the trader can share on their social-media handles, which a user can click on to see the verified snapshot taken directly from the backend.)

When did you decide to start thinking of this verification feature?

It started with a conversation on Twitter. I saw a screenshot and it was obviously fake because of the way it was photoshopped, and I called it out.

What are the signs that they are fake?

There are sometimes obvious errors, such as smudging and superimposed numbers. But people generally don’t have the time to spot such things.

So, in this particular case, you said that it was obviously fake…

Yes, so I said that and that it can be verified. Then that discussion went on till it finally ended in me thinking that why not build a verification tool. We realised that we were in a unique position to build it. One, no broker could build this feature because people may think that the broker is simply trying to make his or her client look good (so the feature may not be seen as reliable). Two, regulators won’t do it because they have their hands full with bigger problems. Three, we realised that we are in a good place to do it because we service many broking platforms and together they account for 70 percent of India’s F&O (futures and options) volumes (so the data can be made available for the feature).

Also read: MTM verification: Will it keep scammers out or serve as a bullying tool?

What about traders’ concerns that they might lose their edge by sharing their positions?

For one, no one can see the orders. All they can see from the statements would be what someone’s position is. So maybe they can figure out if a trader is long or short on a stock. That really does not help anyone, unless the trader is that influential and their long/short position can move an asset’s price.

Also, a trader does not have to share the statement the same day. They can save it and share it the next day, then no one can see another’s live position. A trader can also share the statement after all the trades are closed, which will only show the profit or loss, and there will be no data on the quantity, average price etc.

What about people sharing statements only when they are in profit? What if their profit is wiped out in the next ten minutes, since this feature does not track a trade till the end, how will that loss be captured?

That is a problem that we haven’t solved for. What a user could do is track a trader’s history on the page that will be created with his/her statements, and form a picture from that. If the trader is posting erratically, then that is a sign (that something isn’t right). Also, when they don’t post in a day, we will mark that day too. But this is a very valid concern.

(On November 30, Sensibull decided to allow P&L sharing between 3.30 pm and 11 pm, or after the market closes. Hassan’s tweet said, “This is to avoid intraday fluctuating MTMs that may not portray the right picture”.)