Sebi Ups Intraday Limits For Index Options but Tightens Grip on Scrutiny

The Securities and Exchange Board of India (Sebi) has unveiled a new framework to rein in oversized intraday bets in index derivatives, aiming to strike a balance between market depth and stability. In a circular released on September 1, the regulator said it would introduce clear limits on intraday exposure in index options, by far the most traded segment of the derivatives market.

Under the new framework, a trader’s net intraday position, measured on a futures-equivalent basis, will be capped at ₹5,000 crore. The gross position, also on a futures-equivalent basis, will be capped at ₹10,000 crore, the same threshold already applied at the end of the trading day.

These levels are considerably higher than the current end-of-day net threshold of ₹1,500 crore. Sebi said the higher intraday thresholds were designed to give participants breathing space during the day, while keeping the system under watch. The regulator highlighted that the move was particularly aimed at curbing excessive build-ups on expiry days, when speculative flows have often put the market under strain.

“This framework will enable market-making throughout the day, while preventing the creation of outsized positions on expiry,” Sebi said, adding that it would also provide “predictability, operational clarity, and a fair balance between ease of trading and risk control.”

The new norms, limited strictly to derivatives positioning, follow concerns that the absence of intraday curbs had allowed entities to pile on destabilising exposures.

These concerns have been in the spotlight since the alleged market manipulation incident involving US-based Jane Street Group.

To implement the changes, stock exchanges and clearing corporations have been tasked to come up with a common standard operating procedure for monitoring, to be submitted within 15 days. Market infrastructure institutions will also need to adjust their systems, processes and byelaws accordingly.

The framework will come into effect from 1 October 2025. Penalties for breaches on expiry days will kick in slightly later, on 6 December 2025, aligning with the closure of the ongoing glide path for position limits.