Description

NSE Clearing implements risk management framework for pre-open session in Futures and Options segment, effective December 08, 2025, including margin sufficiency checks and order level risk management.

Summary

NSE Clearing Limited has issued a framework for risk management applicable to the pre-open session in the Futures and Options segment covering both single stocks and indices. This circular implements SEBI’s directive regarding measures for enhancing trading convenience and strengthening risk monitoring in equity derivatives. The framework establishes comprehensive margin sufficiency checks at order level and clearing member level for all pre-open session orders, effective December 08, 2025.

Key Points

  • All orders must pass margin sufficiency checks at order level for inclusion in pre-open session
  • Incoming orders during pre-open will be pre-risk managed for applicable margins (SPAN + ELM)
  • Risk parameters at time of pre-open session and maximum execution price will be considered
  • Order level margins combined with brought forward portfolio assessed for overall margin sufficiency at clearing member level
  • No netting of pre-open orders with brought forward portfolio or earlier offsetting pre-open orders
  • For offsetting pre-open orders at client-contract level, maximum of SPAN+ELM (long or short side) will be considered
  • Calendar spread and cross margining benefits not applicable for pre-open session

Regulatory Changes

This circular implements Point 5.6 on “Pre-open session for the derivatives market” from SEBI circular ref. no: SEBI/HO/MRD/TPD-1/P/CIR/2025/79 dated May 29, 2025. The framework establishes seven specific risk management provisions:

  1. Order Level Margin Checks: Mandatory margin sufficiency verification for all orders before pre-open inclusion
  2. Pre-Risk Management: Contract-level pre-risk management for SPAN + ELM margins during pre-open session
  3. Clearing Member Level Assessment: Aggregate margin sufficiency assessment combining new orders and existing portfolios
  4. Order Acceptance Criteria: Orders accepted only when clearing member level margin sufficiency is confirmed
  5. Netting Restrictions: Elimination of netting benefits between pre-open orders and brought forward portfolios
  6. Offsetting Order Treatment: Special margin calculation methodology for offsetting orders at client-contract level
  7. Margin Benefit Exclusions: Calendar spread and cross margining benefits explicitly excluded from pre-open session

Compliance Requirements

For Trading Members:

  • Ensure all orders submitted during pre-open session meet margin sufficiency requirements
  • Maintain adequate margins at clearing member level to accommodate pre-open orders
  • Account for SPAN + ELM margins on all incoming orders during pre-open session
  • Understand that no netting benefits will apply for pre-open orders

For Clearing Members:

  • Assess overall margin sufficiency combining client’s brought forward portfolio and new pre-open orders
  • Apply maximum of SPAN+ELM (long or short side) for offsetting pre-open orders at client-contract level
  • Ensure margin calculations exclude calendar spread and cross margining benefits during pre-open session
  • Monitor and manage risk parameters applicable during pre-open session time

For All Members:

  • Update internal risk management systems to comply with new pre-open session framework
  • Train staff on new margin calculation methodology for pre-open orders
  • Contact NCL Risk Operations at risk_ops@nsccl.co.in or 1800 266 0050 (IVR Option 2) for clarifications

Important Dates

  • Circular Issue Date: December 03, 2025
  • Effective Date: December 08, 2025
  • Reference SEBI Circular Date: May 29, 2025
  • Reference NCL Circular Date: May 30, 2025

Impact Assessment

Market Impact:

  • Enhanced risk monitoring will strengthen market integrity in equity derivatives segment
  • Stricter margin requirements may reduce speculative activity during pre-open session
  • Improved price discovery mechanism with robust risk controls in place

Operational Impact:

  • Trading and clearing members must upgrade risk management systems by December 08, 2025
  • Increased margin requirements may affect order acceptance rates during pre-open session
  • Members need to reassess margin allocation strategies for pre-open trading
  • Elimination of netting and margin benefits during pre-open may require higher margin deployment

Risk Management Impact:

  • Strengthened risk controls at both order level and clearing member level
  • Reduced systemic risk through comprehensive pre-trade margin checks
  • Better alignment between margin requirements and potential risk exposure during pre-open session
  • Enhanced monitoring capability for clearing corporation through granular order-level risk assessment

Impact Justification

Introduces significant changes to risk management framework for pre-open session in derivatives segment affecting all equity derivatives traders and clearing members with immediate implementation timeline