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Key Points

SEBI is implementing comprehensive new rules for futures and options trading starting October 1st. The regulations aim to reduce excessive market speculation by linking position limits directly to cash market volumes. Traders and brokers will face new restrictions when market-wide open interest approaches defined limits. These measures represent a significant step towards ensuring more transparent and stable derivative market operations.

Key Points: SEBI Tightens F&O Trading Norms to Curb Market Speculation

  • - New market-wide position limits tied to free float and cash volume
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SEBI introduces stricter Futures and Options position, monitoring norms from Oct 1

SEBI introduces stricter derivatives trading rules, linking position limits to cash market volume to reduce market manipulation risks

"Subsequent to its entry in the ban period, the rules should result in a reduction of Future Equivalent open interest - SEBI Circular"

Mumbai, Sep 30

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

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Reader Comments

P
Priya S
As someone who trades regularly, these new limits might reduce my trading volume initially. But if it prevents market manipulation, it's worth it in the long run. Hope the implementation is smooth.
J
James A
The quarterly updates to MWPL based on cash volume data is a smart move. It will keep the limits relevant to actual market conditions rather than being static. Good regulatory thinking!
A
Ananya R
While I appreciate the intent, I'm concerned about the practical implementation. The random intraday monitoring could create uncertainty for traders. SEBI should provide clearer guidelines on how this will work. 🤔
S
Siddharth J
The extension of pre-open sessions to F&O from December is a welcome move. This will help in better price discovery and reduce opening volatility. Good for both retail and institutional traders.
K
Kavya N
Protection for small investors is much needed. Too many people were treating F&O like lottery tickets. These measures should encourage more responsible trading. Jai SEBI! 🇮🇳

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