SEBI released a consultation paper proposing a revamped framework for position limits in the equity derivatives segment, including FutEq-based caps and intraday monitoring. Aimed at balancing liquidity and risk, the approach tightens surveillance on expiry days, introduces random intraday snapshots, and refines limits for net and gross positions for trading members.
The Securities and Exchange Board of India (SEBI) has proposed a review of existing position limits for trading members in equity derivatives, anchoring limits to Future-Equivalent (FutEq) or delta-equivalent measures and strengthening intraday monitoring. The consultation builds on feedback from market participants and deliberations with MIIs and SEBI’s SMAC, moving toward clearer caps and tighter surveillance.
Major takeaways
• FutEq-based limits: Proposed net and gross position limits calibrated in rupees on a FutEq basis for index options and futures, separating end-of-day and intraday caps Steel City.
• Intraday oversight: Exchanges to run multiple random snapshots to monitor compliance intraday, with heghtened focus near close and on expiry days.
• Risk discipline: Additional penalties or surveillance deposits for breaches on expiry days to reduce volatility and concentration risks.
• Stakeholder input: Framework reflects market feedback and committee deliberations, indicating a consultative path to final norms Steel City.
This review signals SEBI’s intent to modernize position controls, align risk metrics with derivatives’ delta exposure, and improve predictability for participants.
Sources: SEBI (Circulars); Steel City Net Trade (circular copy); TaxGuru