SEBI Panel May Propose Rs 1,500-Crore Cap On Intraday Index Derivative Bets

The Securities and Exchange Board of India's secondary market panel is likely to propose a Rs 1,500-crore cap on large intraday index derivate trades, persons privy to the development told NDTV Profit on Friday.

The move follows SEBI’s scrutiny of high-frequency trading firm Jane Street.

At present, there is no limit on intraday index derivate bets.

Earlier in February, the regulator had floated a much higher threshold of Rs 10,000 crore, but the proposal was rolled back after pushback from market stakeholders.

SEBI, according to sources, has now asked stock exchanges to keep a closer watch on intraday positions taken by big players.

NDTV Profit had previously reported that the regulator’s committee is actively considering both intraday position limits and brokers’ exposure caps as part of its review of the derivatives market framework.

In the same Aug. 19 meeting of the secondary market committee of the regulator, several other proposals were brought to light.

People aware of the discussions said governance reforms for exchanges and depositories will be a central theme at the meeting. Proposals include appointing two independent executive directors as heads of separate business verticals who would also sit on the governing boards of MIIs.

Clear roles are also being proposed for executive directors and other key officials, including those heading compliance, risk, technology and cybersecurity functions.

The committee is also examining a proposal to allow interest earned on Investor Protection Fund (IPF) investments to be used for compensating dedicated IPF staff. Alongside this, SEBI is considering the merger of Investor Protection Funds of stock exchanges and commodity derivatives exchanges into a single consolidated pool.

Another reform under discussion is the review of the Special Pre-Open Session (SPOS) mechanism for IPOs and relisted shares. The move is aimed at addressing concerns over price discovery and volatility during the initial stages of trading.

Investor convenience is also on the table, with a plan to introduce a systemic withdrawal and transfer facility for mutual fund investors holding units in demat form. The facility is expected to simplify processes for investors and provide more flexibility in managing their holdings.

Separately, the committee will review the framework for performance-linked pay of top officials at MIIs such as exchanges, clearing corporations and depositories, with an emphasis on linking variable pay to accountability and governance standards.