Sebi Imposes Intraday Limits on Derivatives

Penalties to be slapped at the discretion of exchanges

- NESIL STANEY

In a significant move to curb manipulation in the derivative market, the Securities and Exchanges Board of India (Sebi) on Monday night put out a detailed framework to monitor intraday positions in equity index derivatives. It has also imposed clear intraday limits on positions for each entity trading in index options.

"Intraday net position limit (FutEq) for each entity shall be ₹5,000 crore (as against end of day limit of ₹1,500 crore). Intraday Gross position limit (FutEq basis) for each entity shall be ₹10,000 crore, separately both on long and short sides," said Sebi.

More importantly, it has also mandated that stock exchanges must monitor compliance through at least four random snapshots daily, including one during the high-activity window between 14:45 and 15:30.

The new rules, which will come into effect from October 1, will also attract penalties in case entities cross the prescribed limits from December 6 at the exchanges' discretion—a major shift from the non-penalty mechanism that was introduced earlier.