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    SEBI increases position limits for index derivatives | Capital market news

    Mars Posted on

    Last update: October 15, 2024 | 10:58 p.m. STI

    The Securities and Exchange Board of India (SEBI) has announced changes to position limits and supervisory practices for equity derivatives, particularly index futures and options contracts.

    With immediate effect, SEBI has increased the position limits of trading members (TM) on index derivatives. The new limit is set at the higher of Rs 7,500 crore or 15% of total open interest (OI) in the market, up from the previous limit of Rs 500 crore or 15% of total OI. Position limits will be applicable separately to index futures and index options.

    From April 1, 2025, SEBI will start monitoring positions based on the market’s total open interest at the end of the previous day’s trading. This move from real-time monitoring aligns with current practice in the foreign exchange derivatives segment and is intended to address concerns regarding fluctuations in open positions throughout the trading day.

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    SEBI has clarified that participants will not be penalized or required to unwind their positions in cases where the market open interest falls from the previous day, even if their position remains unchanged. This is to avoid “passive violations” of the new position limits.

    Exchanges and clearing companies are required to amend their statutes and regulations to implement these changes. Market participants, including trading members, are advised to review the SEBI circular and familiarize themselves with the new guidelines.

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    Disclaimer: No Business Standard journalists were involved in the creation of this content.

    First publication: October 15, 2024 | 6:20 p.m. STI

    Mars
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