Description

SEBI introduces intraday position limits of ₹5,000 cr net and ₹10,000 cr gross for equity index derivatives with enhanced monitoring requirements.

Summary

SEBI has introduced a comprehensive framework for monitoring intraday position limits in equity index derivatives. The new framework establishes entity-level intraday net position limits of ₹5,000 crores and gross position limits of ₹10,000 crores (Future Equivalent basis) for index options. Stock exchanges will monitor these limits through at least four random snapshots during the trading day, with penalties applicable for breaches on expiry days.

Key Points

  • Intraday net position limit set at ₹5,000 crores per entity (compared to end-of-day limit of ₹1,500 crores)
  • Intraday gross position limit maintained at ₹10,000 crores (same as current end-of-day limit)
  • Minimum four random snapshots required during trading day for monitoring
  • One snapshot mandatory between 14:45-15:30 hrs (near market close)
  • Additional exposure allowed against securities or cash holdings
  • Penalties and additional surveillance deposits for limit breaches on expiry days

Regulatory Changes

The framework represents a significant shift from the previous no-limit intraday approach to specific quantitative limits. Previously, intraday positions were monitored only through random snapshots for market integrity concerns without defined limits. The new framework establishes clear thresholds while maintaining flexibility for market makers and liquidity providers through higher intraday limits compared to end-of-day restrictions.

Compliance Requirements

  • Stock exchanges must implement minimum four random snapshots daily for position monitoring
  • Entities breaching limits must provide rationale for positions to exchanges
  • Exchanges must examine trading patterns of breach entities including constituent trading
  • Breach instances must be discussed with SEBI in surveillance meetings
  • On expiry days, breaches attract penalties/additional surveillance deposits as determined by exchanges
  • Underlying price at snapshot time must be considered for position calculations

Important Dates

  • September 1, 2025: Circular issued
  • Implementation: Immediate effect from circular date
  • Previous timeline: End-of-day limits glide path from July 1, 2025 to December 5, 2025
  • Normal implementation of end-of-day limits: December 6, 2025

Impact Assessment

This framework significantly impacts high-volume traders and proprietary trading firms engaging in index options, particularly on expiry days. While intraday limits are more generous than end-of-day limits (₹5,000 cr vs ₹1,500 cr net), they introduce new compliance requirements and potential penalties. Market makers retain flexibility through provisions for additional exposure against collateral. The framework aims to prevent outsized positions that could impact market integrity while maintaining adequate liquidity provision capabilities.

Impact Justification

Significant new intraday position limits affecting all index options traders with penalties for breaches