Description

SEBI introduces entity-level intraday position limits for index options with monitoring through random snapshots to ensure market stability

Summary

SEBI has introduced a comprehensive intraday monitoring framework for equity index derivative positions effective from specific dates. The framework establishes entity-level intraday position limits matching current end-of-day limits, with monitoring through minimum four random snapshots during trading hours. This addresses concerns about outsized intraday positions on expiry days while facilitating legitimate market making activities.

Key Points

  • Intraday Net position limit: ₹1,500 crores (FutEq basis) per entity
  • Intraday Gross position limit: ₹10,000 crores (FutEq basis) per entity on both long and short sides
  • Monitoring through minimum 4 random snapshots daily, including one between 14:45-15:30 hrs
  • Additional exposure allowed against securities or cash holdings
  • Penalties for breaches on expiry days
  • Stock exchanges to use underlying price at snapshot time for position calculation

Regulatory Changes

The framework transitions from no specific intraday limits to defined entity-level limits matching end-of-day restrictions. Stock exchanges must implement systematic monitoring through random snapshots throughout trading hours, with mandatory coverage of closing period when activity peaks. Entities breaching limits face examination of trading patterns and additional surveillance requirements.

Compliance Requirements

  • Entities must maintain positions within ₹1,500 crores net and ₹10,000 crores gross limits intraday
  • Stock exchanges must conduct minimum 4 random position snapshots daily
  • One snapshot mandatory between 14:45-15:30 hrs
  • Exchanges must examine trading patterns of limit-breaching entities
  • Additional surveillance deposits/penalties apply for expiry day breaches
  • Entities can claim additional exposure against securities/cash holdings per May 29, 2025 circular

Important Dates

  • July 01, 2025: Initial intraday monitoring implementation
  • December 06, 2025: Normal implementation of end-of-day limits
  • Immediate effect: Framework for strengthened intraday monitoring

Impact Assessment

This framework significantly impacts high-volume traders and market makers by imposing predictable intraday position limits while addressing market integrity concerns from outsized expiry-day positions. The random snapshot monitoring creates operational requirements for continuous position management. Market makers receive clarity through defined limits while maintaining ability to provide liquidity. The framework balances market stability with operational flexibility, particularly targeting expiry day volatility management.

Impact Justification

Critical framework for managing outsized intraday positions in index derivatives affecting all market participants