Market regulator SEBI has announced new position limits for intraday derivative trading (F&O), which will be implemented from October 1.
Under this new rule, the intraday net position limit for index options has been increased from ₹1,500 crore to ₹5,000 crore per unit.
The gross intraday position limit will remain at ₹10,000 crore for now. These limits will apply separately to long and short positions.
SEBI said the move is aimed at balancing market depth and stability.
Why This Change Matters
The new framework, effective from October 1, is designed to:
Ease market activity on all trading days.
Prevent large-scale intraday positions on expiry days.
Improve forecasting and clarity in market operations.
Maintain a balance between trading flexibility and risk management.
According to SEBI, some investors create large positions using excessive leverage, which increases risk and market volatility.
With the new limits, traders will now have to take positions based on their actual capital and margins.
This will:
Increase transparency and stability in the market.
Protect retail investors from heavy losses.
Restrict excessive leverage, reducing the risk of major losses for small traders.
Reason Behind the Step
This decision comes after SEBI temporarily banned American hedge fund Jane Street from the Indian securities market.
The fund was found to be manipulating indices by taking advantage of both the cash and F&O markets.
To monitor compliance, stock exchanges will capture at least four intraday snapshots, including one between 2:45 pm and 3:30 pm, the period of highest trading activity.
If entities exceed the limits, exchanges will:
Review their trading patterns.
Seek explanations from clients.
Impose penalties and additional monitoring deposits, as decided jointly by the exchanges.
