SEBI Brings Intraday Position Limits For Index Options

The Securities and Exchange Board of India has brought an intraday net position limit of Rs 5,000 crore in index options and gross position limit of Rs 10,000 crore, separately for long and short sides. This means that an entity cannot hold the gross position limit above Rs 15000 crore for both sides at any given time. 

Stock exchanges will monitor compliance through at least four random snapshots during the trading day, including one close to market closing time when activity typically peaks, according to a SEBI circular on Monday.

Exchanges will use the underlying price at the time of each snapshot to assess positions. Entities can take additional exposure against securities or cash holdings as per earlier guidelines.

If limits are breached, exchanges will examine trading patterns, seek explanations from clients, and review trades in index constituents. Such cases will also be discussed with SEBI in surveillance meetings.

On options expiry days, breaches will attract penalties or additional surveillance deposits as determined by exchanges.

As per the SEBI circular, the changes have been brought due to instances of outsized intraday FutEq positions created by certain entities in index options on the day of contract expiry and the risks to market integrity thereof. The move follows SEBI's scrutiny of high-frequency trading firm Jane Street.

Stock exchanges and clearing corporations must issue a joint standard operating procedure within 15 days, with the rules effective from October 1, 2025, and expiry-related penalties applicable from December 6, 2025.

The regulator said the measures would bring predictability, operational clarity, and safeguard orderly trading while allowing active participation by liquidity providers and market makers.

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