SEBI New Rule: The Securities and Exchange Board of India (SEBI) is implementing new rules for the derivatives market starting tomorrow, October 1st. This rule is being implemented to curb unnecessary risk and excessive volatility in intraday trading. In its circular, SEBI clarified that intraday position limits have now been set for each trading entity in equity index derivatives.
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SEBI New Rule: The Securities and Exchange Board of India (SEBI) is implementing new rules for the derivatives market starting tomorrow, October 1st. This rule is being implemented to curb unnecessary risk and excessive volatility in intraday trading. In its circular, SEBI clarified that intraday position limits have now been set for each trading entity in equity index derivatives, preventing unnecessary risk and market volatility. This limit will come into effect tomorrow, October 1st, 2025.
What are the new rules?
Net intraday position limit: Now, the net position (on a futures-equivalent basis) of any entity will not exceed ₹5,000 crore.
Gross intraday position limit: The gross position limit has been set at ₹10,000 crore, which is currently the same as the end-of-day limit.
How will monitoring be done?
Stock exchanges will now be required to monitor by taking random snapshots at least four times during trading. One of these snapshots will be taken between 2:45 pm and 3:30 pm. This is because the last hour of a trading session often sees heavy activity.
In addition, exchanges will also be required to take into account the current price of the index when monitoring positions, allowing for accurate real-time risk assessment.
This measure aims to ensure that no investor or trader disrupts market stability by making large trades, especially on option expiry days when there is significant volatility.
Action against Violators
If an entity violates the prescribed limits, then:
– The stock exchange will examine the entity’s trading patterns.
– The client will be asked to explain the reason for such a large position.
– The entity’s trading in index-linked stocks will be investigated.
– If necessary, the case will be reported to SEBI’s surveillance meeting.
Penalties or additional surveillance deposits may be imposed on trading entities for violations, especially on expiry days.
Why was this step taken?
In recent months, concerns have grown that some trading entities are making unusually large trades in the market. These entities typically take large positions on expiry days, creating volatility in the market. This creates market chaos, and some individuals exploit this. SEBI is introducing these new rules to prevent this disruption. The regulator has become more vigilant following the alleged fraudulent activities involving the Jane Street Group.
These new intraday monitoring rules will come into effect from October 1, 2025, while the penalty provisions for violations of expiry day rules will come into effect from December 6, 2025.
