Sebi introduces new intraday derivative position limits effective Oct 1

Markets regulator Sebi has introduced new intraday position limits for index options trading, through a late Monday circular. With these enhanced limits, Sebi aims to give market participants greater flexibility while maintaining strong oversight. The new rules will take effect from October 1, 2025, with penalty provisions for expiry-day breaches kicking in from December 6, 2025.

The move comes as Sebi seeks to ensure that the huge intraday positions typically seen on expiry days are kept under check, providing “predictability, operational clarity, and a fair balance between ease of trading and risk management.”

The regulator noted that some entities were taking oversized intraday positions in index options on expiry day. With these new limits, Sebi, along with exchanges, intends to reduce risks of heightened volatility.

“It is decided to implement the following entity-level intraday monitoring framework for index options to ensure market stability, while facilitating participation by various market participants including liquidity providers/market makers,” the Sebi circular said.

What are the new limits?

The net intraday position, calculated on a futures-equivalent basis, will be capped at ₹5,000 crore per entity, compared to the much lower end-of-day net cap of ₹1,500 crore. The gross intraday position will be capped at ₹10,000 crore per entity, separately for long and short sides, which is the same as the existing end-of-day gross limit.

To ensure compliance, stock exchanges have been advised to monitor these positions through at least four random snapshots during the trading session. One of these checks must be conducted between 2:45 pm and 3:30 pm, when trading activity typically spikes ahead of market close.

While taking these position snapshots, exchanges must consider the prevailing underlying price to ensure assessments reflect actual market conditions.

If entities are found to be breaching these position limits, exchanges will have to assess their trading patterns, seek rationale for such positions from clients, and discuss these instances with Sebi during surveillance meetings. Further, on expiry days, breaches of intraday limits will attract penalties or require additional surveillance deposits.

Sebi has also asked exchanges and clearing corporations to draft a standard operating procedure (SOP) for intraday assessment within 15 days and share it with market participants. Market infrastructure institutions must also update their systems, processes, and byelaws accordingly.