2 Sep 2025 : India’s capital markets regulator, the Securities and Exchange Board of India (SEBI), has rolled out a stringent new framework to monitor intraday positions in equity index derivatives, effective October 1, 2025. The initiative aims to curb excessive risk-taking, limit potential manipulation, and enhance overall market stability—particularly around volatile expiry sessions.
Key Provisions of SEBI’s New Framework
- Intraday Net Position Cap: Traders are now restricted to a maximum ₹5,000 crore net intraday position per entity in index options—a significant jump from the prior ₹1,500 crore end-of-day limit.
- Gross Intraday Exposure Limit: Gross positions—long and short counted separately—are capped at ₹10,000 crore per entity.
These updates apply only to index options, providing a safety net for high-stakes market participants without compromising liquidity or institutional activity.
Real-Time Compliance and Surveillance
SEBI has mandated stock exchanges to conduct at least four random intraday snapshots of trading positions. One of these must occur during peak trading activity—specifically between 2:45 pm and 3:30 pm IST, to capture any late-session volatility or buildup.
If entities are found in violation, exchanges will scrutinize their trading patterns and may require explanations. Expiry-day breaches could result in penalties or additional surveillance deposits, as decided by exchanges.
Rationale Behind the Move
This bold step by SEBI comes on the heels of its unprecedented action against U.S. high-frequency trading firm Jane Street, which was barred from the Indian markets and had funds seized for alleged manipulation—a move that underscored the risks posed by unregulated intraday strategies.
By enforcing firm caps and proactive monitoring, SEBI aims to balance market discipline with liquidity, while safeguarding retail investor interests and maintaining orderly market conduct.
Experts Weigh In
Market analysts welcome the regulations. Experts believe limiting oversized intraday exposure, especially for expiry sessions, will reduce sharp price swings and enhance market predictability. While large players may bear the brunt, the move ultimately supports a more transparent trading environment.
Summary
SEBI introduces intraday limits on index option trading from October 1—₹5,000 crore net, ₹10,000 crore gross per entity—with real-time monitoring and expiry-day penalties to bolster market integrity.