SEBI to likely relax proposed limits on index options trading: Report

IANS May 12, 2025 292 views

The Securities and Exchange Board of India is preparing to significantly relax its proposed restrictions on index options trading. By potentially increasing position limits and implementing a more sophisticated surveillance approach, SEBI aims to provide traders with greater flexibility while maintaining market integrity. The proposed changes include a substantial increase in both net and gross trading limits, with a focus on monitoring potential market manipulations. This regulatory adaptation signals SEBI's commitment to creating a more dynamic and responsive financial trading environment.

"As per the previous proposal of the regulator, the net end of the day limit was Rs 500 crore only" - NDTV Profit Report
New Delhi, May 11: Capital markets regulator, the Securities and Exchange Board of India (SEBI), is likely to ease the proposed curbs on trading in index options,

Key Points

1

SEBI likely to raise net trading limit to Rs 1,500 crore

2

Gross trading limit expanded to Rs 10,000 crore

3

Intraday trading to remain largely unrestricted

4

New delta-based exposure calculation method

It is likely to introduce a much higher threshold for net and gross position limits, an NDTV Profit report said on Sunday, citing people aware on the matter.

SEBI is likely "leaning towards allowing a net end of the day limit of Rs 1,500 crore and a gross limit of Rs 10,000 crore (each side) for Index Options".

"As per the previous proposal of the regulator, the net end of the day limit was Rs 500 crore only with a gross limit of Rs 1,500 crore," the report noted.

Intra-day trading in index options is likely to be exempt from any cap. Instead, a robust surveillance protocol will be implemented where exchanges, in coordination with SEBI, will monitor intraday positions up to four times a day.

According to the report, if a trader's exposure breaches certain thresholds, the regulator will investigate for possible concentration or manipulation.

The regulator is also moving towards a delta-based open interest metric instead of the traditional notional method.

This approach accounts for the actual economic exposure of options trades rather than their notional size, which can be misleading.

Last week, SEBI introduced stricter rules to improve governance at key market infrastructure institutions (MIIs) such as stock exchanges, clearing corporations, and depositories.

In a move aimed at preventing conflicts of interest and ensuring market integrity, the SEBI has made it mandatory for certain directors to observe a cooling-off period before joining a competing institution.

"Provided that the non-independent director on the governing board of the depository may be appointed in a recognised stock exchange or a recognised clearing corporation or another depository with the prior approval of the Board, only after a cooling-off period as may be specified by the governing board of such depository," it said.

Reader Comments

R
Rahul K.
Good move by SEBI to balance regulation with market growth. The Rs 1,500 crore net limit seems reasonable - too strict rules would have killed liquidity. Hope they maintain this balanced approach going forward. 👍
P
Priya M.
As a small trader, I'm relieved! The initial proposal would have made options trading nearly impossible for retail investors. But SEBI should ensure proper monitoring - we've seen how unchecked derivatives trading can create volatility.
A
Amit S.
Delta-based open interest is a game changer! Finally moving away from misleading notional values. This shows SEBI is learning from global best practices. More such progressive reforms please!
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Neha T.
While the relaxation is welcome, I'm concerned about the 4x daily surveillance. Won't this create unnecessary compliance burden? SEBI should focus more on educating retail investors rather than over-monitoring.
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Vikram J.
The cooling-off period for MII directors is crucial. We've seen too many instances of regulatory capture in India. Strong governance measures like this will boost confidence in our markets. Thumbs up!
S
Sanjay P.
SEBI is doing chakachak work! But they should also look at reducing options expiry days - weekly expiries are making markets too speculative. Long-term investors like me are finding it difficult to navigate this casino-like environment.

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