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 implemented a comprehensive framework for monitoring intraday position limits in equity index derivatives, establishing entity-level limits of ₹5,000 crores for net positions and ₹10,000 crores for gross positions. This framework addresses concerns about outsized intraday positions created by certain entities, particularly on contract expiry days, and aims to ensure market stability while facilitating participation by liquidity providers and market makers.

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 per entity (separately for long and short sides)
  • Stock Exchanges to monitor through minimum four random snapshots during trading day
  • One mandatory snapshot between 14:45 hrs to 15:30 hrs (market closing time)
  • Underlying price at time of snapshot to be considered for position monitoring
  • Framework targets outsized positions on contract expiry days

Regulatory Changes

The new framework introduces specific intraday position limits that were previously undefined. While end-of-day limits were already established (₹1,500 cr net, ₹10,000 cr gross), intraday positions were only subject to random monitoring without specific thresholds. The new rules establish clear intraday limits with enhanced monitoring requirements including mandatory snapshot timings and consideration of underlying prices at snapshot times.

Compliance Requirements

  • All NSE members must ensure entity-level positions do not exceed ₹5,000 crores net FutEq intraday
  • Gross positions must not exceed ₹10,000 crores on either long or short side
  • Members must maintain compliance during all four random snapshot checks
  • Special attention required during 14:45-15:30 hrs window when heightened activity occurs
  • Position calculations must use underlying price at time of snapshot

Important Dates

  • September 1, 2025: SEBI circular issued (SEBI/HO/MRD/TPD/CIR/P/2025/122)
  • September 2, 2025: NSE circular issued for member notification
  • Immediate implementation of intraday monitoring framework
  • End-of-day limits glide path: July 1, 2025 to December 5, 2025
  • Normal implementation of end-of-day limits: December 6, 2025

Impact Assessment

This framework significantly impacts trading strategies, particularly for large institutional players and proprietary traders who utilize index options for hedging or speculation. The intraday limits, while higher than end-of-day limits, represent a substantial constraint on position-taking during trading hours. Market makers and liquidity providers may need to adjust their models to ensure compliance during random snapshot checks. The mandatory monitoring window during market closing hours addresses specific concerns about manipulation and excessive risk-taking during high-activity periods.

Impact Justification

Significant reduction in intraday position limits for index derivatives affecting all market participants with immediate implementation