The Securities and Exchange Board of India (SEBI) has announced new restrictions on intraday positions in equity index derivatives, reintroducing limits to curb oversized exposures and maintain market integrity. The revised framework, released on Tuesday, will come into effect from October 1.
Under the new rules, SEBI has capped the net intraday position of any trading entity at ₹5,000 crore, calculated on a futures-equivalent basis. The gross intraday position will be restricted to ₹10,000 crore, aligning it with the existing end-of-day gross position limit. This move is intended to reduce the risks arising from excessively large intraday bets, particularly during volatile market conditions.
The regulator highlighted growing concerns over participants taking disproportionately high exposures in index options, especially on expiry days. Such practices, according to SEBI, were creating short bursts of volatility that threatened both liquidity and orderly functioning of the market. By imposing a uniform ceiling on positions, the regulator seeks to balance speculative activity with the need for stability.
In addition to the position caps, SEBI has mandated exchanges to closely track exposures during market hours. At least four random snapshots must be taken daily to capture traders’ positions, with one compulsory check between 2:45 pm and 3:30 pm, a period often marked by intense activity as expiry pressures and last-minute adjustments peak. These monitoring requirements aim to prevent sudden concentration of risk in the closing stages of trading.
The move comes in the backdrop of heightened regulatory caution following the alleged manipulation case involving the Jane Street Group, which prompted calls for tighter oversight of index derivatives. While SEBI has not directly linked the new framework to any single incident, the timing underscores its intent to restore confidence in the fairness of the market.
Exchanges and clearing corporations have been directed to collaborate on a standard operating procedure for intraday monitoring and submit it within 15 days. This will form the operational backbone of the new system, ensuring consistent checks across trading platforms and reducing chances of oversight.
SEBI has also outlined measures for handling breaches. If an entity crosses the prescribed intraday limits, exchanges will be required to scrutinise its trading patterns, seek explanations from clients, and analyse whether the entity has engaged in trading of index constituents that could impact prices. Any such cases will be discussed in joint surveillance meetings with the regulator.
On expiry days, when derivative volumes and speculative pressures are at their highest, violations will attract stricter consequences. Exchanges will be empowered to impose penalties or require additional surveillance deposits from entities exceeding the thresholds. These penalty provisions will take effect from December 6, 2025, coinciding with the end of the glide path for full implementation of the new regime.
Market participants have long debated the balance between speculative freedom and regulatory discipline in derivatives trading. With India’s index options market among the most liquid globally, regulators face the dual challenge of facilitating growth while safeguarding stability. The latest intervention reflects SEBI’s intent to keep speculative activity within manageable limits without stifling legitimate hedging and trading strategies.
The reintroduction of intraday position caps marks one of the most significant regulatory adjustments in recent years for index derivatives. For traders, it signals a shift towards tighter scrutiny and the need for disciplined risk management. For the broader market, the measures are designed to prevent disruptive volatility and reinforce investor confidence in the robustness of India’s financial system.
