SEBI’s New Rules for Intraday Derivatives Trading
India’s market regulator, the Securities and Exchange Board of India (SEBI), has introduced a new framework that will limit the intraday exposure for equity index derivatives, aimed at reinforcing market stability and transparency.
What’s in the New SEBI Circular?
- Issued via Circular No. SEBI/HO/MRD/TPD-1/P/CIR/2025/122 on September 1, 2025, the framework takes effect from October 1, 2025, with expiry-day penalties effective from December 6, 2025.
- Intraday Net Position Limit
Traders and institutions must restrict intraday net exposure (long minus short positions measured in Futures Equivalent, or FutEq) to ₹5,000 crore per entity—much higher than the existing end-of-day net limit of ₹1,500 crore.
- Intraday Gross Position Limit
Gross exposure (combined long and short positions) is capped at ₹10,000 crore per entity, aligning with the current end-of-day gross limit.
- Monitoring via Snapshots
Stock exchanges must now conduct at least four random intraday snapshots of positions, including one between 2:45 PM and 3:30 PM, which is typically the most volatile trading window.
- Expiry-Day Penalties
Any breach of these limits on contract expiry days can result in penalties or additional surveillance deposits, enforcing stricter oversight from December 6, 2025 onward.
- Collateral-Based Excess Exposure
Entities with sufficient collateral—held in securities or cash—may take additional exposure, subject to regulatory compliance.
Why This Matters to Investors
- Curbing Excessive Speculation
By limiting intraday leverage, SEBI aims to reduce short-term volatility, particularly on expiry days when speculative activity spikes.
- Strengthened Market Integrity
The new limits and real-time surveillance prevent outsized bets that could manipulate pricing, supporting fairer markets.
- Balanced Trading Environment
While large players face new caps, the framework retains flexibility for market makers and liquidity providers—maintaining healthy trading volumes.
- Greater Transparency and Predictability
Uniform exposure limits and snapshot checks offer clarity and stability to all market participants.
A Simple Analogy for Novice Investors
Think of day trading in index options like driving in heavy traffic. Previously, drivers (traders) could accelerate rapidly without limits, often causing chaos.
Now, SEBI has set speed limits and random traffic checks at key points—ensuring safer, more controlled movement and reducing the risk of sudden accidents. This encourages smoother, more disciplined driving (trading).
Summary Table
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Feature
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New Limit Effective Oct 1, 2025
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Notes
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Intraday Net (FutEq)
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₹5,000 crore per entity
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Up from ₹1,500 crore end-of-day
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|
Intraday Gross
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₹10,000 crore per entity
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Same as existing gross limit
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|
Monitoring Snapshots
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At least 4 per day, incl. 2:45–3:30 PM
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Enhanced real-time surveillance
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Expiry-Day Penalties
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Enforcement from Dec 6, 2025
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Additional surveillance/fines
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Excess Exposure
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Allowed if backed by collateral
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Preserves institutional flexibility
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Final Thoughts
SEBI’s new intraday position limit framework is a well-balanced reform—designed to tame speculative excesses without stifling market activity. It ensures fairer, safer, and more transparent trading in equity index derivatives, ultimately protecting retail and institutional investors alike.
Staying informed of such regulatory shifts is essential for smart investing.
Reference List:
TaxGuruTaxscanSCC Online
SCC OnlineTaxGurumint
SCC Onlinemint
SCC OnlineTaxGuru
TaxGuruSCC Online
The Economic TimesmintReuters
The Economic TimesReuters
mintThe Economic Times
SCC OnlineThe Economic Times
