SEBI announces new framework for intraday position limits for equity index derivatives

SEBI announces new framework for intraday position limits for equity index derivatives

The norms will be effective from 01 October

The Securities and Exchange Board of India (SEBI) has announced a new framework for intraday position limits for equity index derivatives.

The circular stated that the framework capped intraday net positions in index options at Rs,5,000 crore per entity, versus an end-of-day cap of Rs.1,500 crore. Gross intraday exposure has been set at Rs.10,000 crore each for long and short-term positions.

It added that stock exchanges would monitor compliance using at least four random snapshots during the trading day, including one between 2.45 pm and 3.30 pm, when trading activity peaked.

SEBI has stepped up surveillance measures in the derivatives segment to curb excessive volatility and speculation. It has permitted higher position limits with the condition of additional margin requirements. This effectively raises the cost of trading for those seeking extra exposure, while simultaneously reducing overall market risk.