The Securities and Exchange Board of India (SEBI) has announced the reintroduction of intraday position limits for trading in equity index derivatives, effective from October 1, 2025. This move aims to reinforce risk management and ensure the orderly functioning of India’s derivatives market, one of the largest and most active globally.
Key Highlights of SEBI’s New Intraday Limits Framework:
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Net intraday position cap: ₹5,000 crore per entity (on futures-equivalent basis)
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Gross intraday position cap: ₹10,000 crore per entity (mirroring existing end-of-day limits)
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Applies exclusively to index options trading
The regulator’s decision comes amid rising concerns over oversized intraday exposures, especially on options expiry days, which have historically led to increased market volatility and potential integrity risks.
Enhanced Monitoring and Surveillance
Stock exchanges will implement strict monitoring protocols, capturing at least four random position snapshots during trading sessions. One critical snapshot will occur between 2:45 pm and 3:30 pm, a period known for intense position squaring before market close.
Entities exceeding position limits will face detailed scrutiny. Exchanges will:
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Analyze trading patterns and request justifications from clients
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Examine trades in underlying index constituents
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Report findings to SEBI in surveillance meetings
On expiry days, violations may attract penalties or surveillance deposits, underscoring SEBI’s commitment to safeguarding market integrity.
Balancing Market Liquidity and Risk Controls
SEBI emphasizes that the new framework is designed to support market makers and genuine hedging activities, allowing them to maintain liquidity by permitting additional exposures backed by securities or cash collateral. The goal is to balance ease of trading with prudent risk management.
The regulations will be limited to index options, which dominate India’s derivatives trading landscape. SEBI’s move follows concerns over potential market manipulation, including incidents like the alleged Jane Street Group manipulation case.
Implementation Roadmap
Market infrastructure institutions, including stock exchanges and clearing corporations, are mandated to prepare and submit a Standard Operating Procedure (SOP) within 15 days. This SOP will outline processes for intraday monitoring and ensure timely communication with market participants.
Additionally, system upgrades and bylaw amendments will be required to support the new framework.
The intraday position limits will be enforced starting October 1, 2025, while expiry-day penalty provisions will be effective from December 6, 2025.
Why This Matters
SEBI’s reintroduction of intraday position limits is a crucial step towards enhancing market transparency, reducing excessive speculative risks, and maintaining stable price discovery mechanisms in India’s derivatives markets. Traders, brokers, and investors must align with the new norms to ensure compliance and contribute to a safer trading environment.