Sebi to redraw lines in F&O trading

New risk metrics target speculative churn; parts of the original plan revised after industry pushback

- KHUSHBOO TIWARI

In a sweeping overhaul of risk monitoring in the derivatives segment, the Securities and Exchange Board of India (Sebi) is set to implement a new raft of measures first outlined in February. The goal is to rein in speculative activity in the derivatives market. Despite some pushback from the industry, the regulator will go ahead with key risk metrics while revising parts of the original proposal.

Sebi will adopt a new method for calculating open interest (OI), known as the future equivalent or delta-based framework. It will also raise the gross position limit for index options to ₹10,000 crore, according to sources. The February consultation paper had suggested a much lower gross limit of ₹1,500 crore for index options, drawing objections from several market makers, including high-frequency traders, who argued it would stifle legitimate trading.