When it comes to the stock market, beginners often get attracted to trading like intraday and options. Well, this is all because of huge profit in the short period of time. But if you are a government employee then it is time to think, can government employees do trading in the stock market?
Well, for this it is important to understand what differentiates trading from investment. So, let’s get into the detail then.
Unfortunately, the answer is no, government employees are prohibited to do futures and options trading as it comes under
It is also written that no public servant shall make or permit any person or family member acting on their behalf to doing any kind of investment that can affect their current position or influence them in the discharge of their duties.
Can Government Employees do Trading in Stock Market?
Stock market trading is actually speculation. Now what does speculation mean?
Speculation is an act where a trader conducts financial transactions that have the risk of losing value along with expectations of remarkable profit. The reason traders do speculate is the hope of a large profit. Now, the trading products like intraday, futures, and options come under speculation.
And as per the Central Civil Services (Conduct) Rules, 1964 public servants can not perform any kind of speculative activity. Hence, Government employees cannot trade in the stock market.
Now, why there are so many restrictions on government employees when it comes to trading in the stock market?
Well, this is because all public servants whether they are serving central or state government abide by certain regulations that prohibit them from making any unfair profit from trading and practice like insider trading as government employees can have access to most of the insider information of the businesses.
Also, the risk associated with trading in the stock market hampers the integrity and tasks of government employees.
So, whether it is intraday or options trading in stocks, commodities, or currencies, government employees are not allowed to get into any of such trades.
Where Can Government Employees Do Trading?
Government employees are only restricted to speculating in the share market i.e. intraday and options trading. But when it comes to stocks, there are many short and long term investment options that brings an opportunity to gain high return.
Stock trading vs options trading gives you a better understanding of the differences between speculation and short-term trades and investment.
Although public servants are not allowed to trade they can invest in companies. Investment in the share market simply means putting your capital in a business that has the potential to grow in the long run.
By investing their legally earned money they can gain a return on their investment. To begin an investment, the government employee needs to open a demat account with the registered stockbroker where they can hold their securities. Other than investment in the shares of the company, the government employees are provided with other options as well:
Here are some best investment options for government employees:
- Mutual fund schemes
- Initial Public Offerings
- Public provident fund
- National pension scheme
- Long-term investment in stocks
- Bank deposits
When you enter the stock market, you must read all the rules given by Central Service Rules,1964 if you want to invest safely. We suggest you build an investment portfolio to keep track of your financial goals.
So, if you are a movement employee then need to consider the products where you can invest in the share market to grow your money. As discussed, there are different investment options for public servants as well and to do the right investment it is important to learn stock market.
You can begin with books, watching videos, or enrolling yourself in stock market courses that help you in learning the basics and advanced concepts of fundamental analysis and in polishing your investment skills.
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