SEBI issues New Framework to Monitor Intraday Position Limits in Equity Index Derivatives
SEBI introduced a new framework to monitor intraday position limits in equity index derivatives to ensure market stability and curb excessive trading risks.
SEBI - Taxscan
SEBI - Taxscan
The Securities and Exchange Board of India (SEBI) issued a circular dated September 1, 2025, announcing a new framework for monitoring intraday position limits in equity index derivatives. Earlier, SEBI had consulted with market participants and proposed limits on positions in index options measured in Future Equivalent (FutEq) terms.
Based on the feedback and further discussions with its advisory committees and market infrastructure institutions, SEBI revised these limits and has now introduced a clear structure for both end-of-day and intraday monitoring.
Key Provisions in the Circular
- End-of-Day Limits (already in place)
- Net FutEq: Rs. 1,500 crore
- Gross FutEq: Rs. 10,000 crore
- These apply from December 6, 2025, after a glide path that began in July 2025.
- Intraday Limits (new framework)
- Net FutEq: Rs. 5,000 crore per entity (higher than the end-of-day limit to allow flexibility).
- Gross FutEq: Rs. 10,000 crore per entity (same as end-of-day).
- Stock exchanges must take at least four random snapshots of positions during the trading day, including one close to market closing (2:45–3:30 pm) to check compliance.
3. Additional Rules
- Extra exposure can be taken if backed by securities or cash.
- If an entity breaches the limit, exchanges must review their trading activity, seek explanations, and discuss with SEBI.
- On expiry days, breaches will attract penalties or additional surveillance deposits.
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The circular clarifies that the framework applies only to index options and not to stock-specific derivatives. Exchanges and clearing corporations must prepare a joint Standard Operating Procedure (SOP) for implementation and submit it to SEBI within 15 days.
The provisions of the circular will come into effect from October 1, 2025, while the penalty mechanism linked to expiry day breaches will begin from December 6, 2025.
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