Sebi's Committee to Review Position Limits for Brokers, Corp Governance at Market Infra Institutions

Markets regulator Sebi's Secondary Market Advisory Committee (SMAC) is likely to meet on Tuesday to review position limits for brokers in the equity derivatives segment and introduce new intraday position limits for equity index derivatives, people familiar with the matter said.

At present, the position limits of trading members in equity index futures contracts are higher than ₹7,500 crore or 15% of the total open interest in the market. The position limits are separately applicable for index futures and index options.

To enhance risk monitoring and improve trading convenience in the derivative segment, Sebi, in February, proposed new position limits for index derivatives to better reflect actual market risks.

For index options, the end-of-day limits are set at ₹500 crore (net) and ₹1,500 crore (gross), while intra-day limits are ₹1,000 crore (net) and ₹2,500 crore (gross). For index futures, the end-of-day limit is proposed to increase from ₹500 crore to ₹1,500 crore, with an intra-day limit of ₹2,500 crore.

Also, the Sebi committee is expected to discuss measures to strengthen governance of Market Infrastructure Institutions (MIIs) comprising stock exchanges, clearing corporations and depositories. This includes appointing two EDs of appropriate stature and independent as heads of separate verticals on the governing board, people familiar with the matter said.

The role and responsibilities of EDs and officials such as chief technology officer, compliance officer and chief risk officer and chief information officer would be taken up for discussion. Besides, the committee is reviewing the variable pay of top officials at MIIs.

Another agenda under consideration is the review of the Special Pre-Open Session mechanism for IPOs and relisted shares, along with provisions pertaining to base price and price bands for exchange-traded funds (ETFs).

The committee is also examining a proposal to introduce a systematic withdrawal and transfer facility for mutual fund investors holding units in demat form. The move is aimed at providing flexibility to investors in managing their holdings.

Additionally, the committee is considering a proposal permitting interest earned on Investor Protection Fund (IPF) of depositories for compensating dedicated IPF employees and constituting a single Investor Protection Funds of stock exchanges and commodity derivatives exchanges.