SEBI introduces stricter Futures and Options position, monitoring norms from Oct 1

Mumbai: The Securities and Exchange Board of India (SEBI) has announced that it will implement stricter position limits in derivatives trading, enhanced monitoring and revised norms for position in a stock during the ban period, effective from October 1.

The new measures aim to reduce excessive speculation and align risk with the underlying cash market activity.

The market-wide position limit or the maximum number of bets allowed will now be linked to the cash volume and free float of the scrip and has been fixed as the lower of 15 per cent of free float or 65 times of cash volume across exchanges, the markets regulator said.

SEBI informed that Market Wide Position Limit (MWPL) will be updated quarterly based on rolling cash volume data. SEBI expects that tying the MWPL to cash market delivery volume may also reduce the risk of manipulation.

"Subsequent to its entry in the ban period, should result in a reduction of Future Equivalent (FutEq) open interest (OI) on an end-of-day basis. For instance, if the delta position is (+10) or say (-10) at the end of day 1, then it could be reduced to 0 by the end of day 2," SEBI said about another new norm.

Once the market-wide open interest for any share exceeds 95 per cent of the MWPL for the scrip, brokers and traders can trade only to decrease their positions through offsetting positions.

The market regulator will also introduce intraday monitoring of MWPL utilisation for single stocks from November 3, 2025. Clearing corporations will conduct these checks at least four random times throughout the intraday trading session. If breaches occur, exchanges will take actions, including the imposition of an additional surveillance margin.

From December 6, 2025, pre-open sessions will be extended to F&O to enhance trading convenience and liquidity management, similar to the practice in the cash market, the release noted.

IANS