Traders in index options may face intra-day limits

Sebi in November last year tripled the lot size of index options

- Ram Sahgal & Neha Joshi

A committee set up by the capital markets regulator has discussed a proposal to introduce an intraday net exposure limit of ₹1,500 crore on the expiry day of weekly options like Nifty and Sensex to curtail outsized positions and frenzy in trading, according to three people aware of the matter.

The discussions of the Secondary Market Advisory Committee (SMAC) on Tuesday came after the Securities and Exchange Board of India (Sebi) cracked down on US-based hedge fund Jane Street for alleged manipulation of Bank Nifty and Nifty to make outsized gains in options trading on these two indices.

Sebi in an interim order on 3 July said the gains were at the cost of losses borne largely by retail clients. Jane Street has deposited ₹4,844 crore in an escrow account in Sebi’s favour to continue trading until the regulator completes its investigation. Jane Street has denied Sebi’s allegations.

Sebi didn’t respond to Mint's emailed queries.