Sebi to ease HFT rules, but keeps watch on retail F&O

The market regulator is keeping a close watch on the options market and may tighten rules for retail investors further, if required, as their participation remains high despite last year's curbs.

- Ram Sahgal & Neha Joshi

Alongside, the Securities and Exchange Board of India (Sebi) may drop a February proposal to monitor position limits for index options through the day, besides increasing position limits significantly in potential relief for high-frequency traders (HFTs), two people aware of the matter said.

The regulator may also look to modify the market-wide position limit (MWPL) across exchanges and link it to delivery volumes of stocks to prevent manipulation and cornering of stocks by any entity, the people cited above said on the condition of anonymity.

MWPL refers to the total number of stock options and futures contracts one can trade across exchanges.

A key area of concern for the regulator is the level of retail activity in options that remains high, despite two sets of proposals in October and February.