What Are the New Stricter Futures and Options Position Monitoring Norms Introduced by SEBI?
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Synopsis
SEBI is tightening its grip on derivatives trading with new regulations effective October 1. This strategic move aims to curb speculation and align trading risks with actual market conditions. Discover how these changes will impact traders and the overall market dynamics in India.
Key Takeaways
- SEBI's new regulations will take effect from October 1.
- The Market Wide Position Limit (MWPL) will be updated quarterly.
- Open interest exceeding 95% of MWPL will restrict trading.
- Intraday monitoring begins on November 3, 2025.
- Pre-open sessions for F&O starting December 6, 2025.
Mumbai, Sep 30 (NationPress) The Securities and Exchange Board of India (SEBI) has declared its intention to enforce stricter position limits in derivatives trading, along with enhanced monitoring and updated regulations regarding stock positions during ban periods, starting October 1.
The objective of these new regulations is to mitigate excessive speculation and ensure that risk levels are consistent with the underlying cash market activities.
The market-wide position limit, which represents the maximum number of trades permitted, will now be tied to the cash volume and free float of the stock. It has been established as the lesser of 15 percent of free float or 65 times the cash volume across exchanges, according to the market regulator.
SEBI stated that the Market Wide Position Limit (MWPL) will be revised on a quarterly basis utilizing rolling cash volume data. This measure is anticipated to diminish the risks associated with market manipulation.
As per the new guidelines, once a security enters its ban period, there should be a decrease in Future Equivalent (FutEq) open interest (OI) at the close of each trading day. For example, if the delta position is (+10) or (-10) at the end of day one, it should ideally be brought down to zero by the end of day two.
When the market-wide open interest for any stock surpasses 95 percent of the MWPL, brokers and traders will only be able to engage in transactions aimed at reducing their positions through offsetting trades.
Additionally, starting November 3, 2025, SEBI will implement intraday monitoring of MWPL usage for individual stocks. Clearing corporations will perform these checks at least four times randomly during the intraday trading session. Should any breaches be detected, exchanges may take actions including the enforcement of an additional surveillance margin.
From December 6, 2025, pre-open sessions will be extended to Futures and Options (F&O) to improve trading convenience and liquidity management, mirroring practices seen in the cash market, as noted in the release.
Point of View
I believe SEBI's stringent measures on derivatives trading reflect a necessary evolution in market regulation. Ensuring that trading practices align with underlying market realities is crucial for maintaining integrity and investor confidence in India’s financial markets.
NationPress
30/09/2025
Frequently Asked Questions
What is the purpose of the new SEBI regulations?
The new SEBI regulations aim to reduce excessive speculation in derivatives trading and align risks with the actual activities in the cash market.
How will the Market Wide Position Limit (MWPL) be determined?
The MWPL will be linked to the cash volume and free float of the stock, set as the lesser of 15 percent of free float or 65 times the cash volume across exchanges.
What happens if the open interest exceeds 95% of the MWPL?
If the open interest exceeds 95% of the MWPL, brokers and traders will only be permitted to trade to reduce their positions.
When will SEBI start intraday monitoring of MWPL?
Intraday monitoring of MWPL for single stocks will commence on November 3, 2025.
What changes are expected in the pre-open sessions for F&O?
From December 6, 2025, pre-open sessions will be extended to Futures and Options to enhance trading convenience and liquidity management.
