Have Stricter Futures and Options Monitoring Norms Arrived from SEBI?
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Synopsis
SEBI's new measures, effective from October 1, aim to curb speculation and ensure market alignment. With updated position limits and monitoring protocols, traders must navigate new regulations to remain compliant while protecting their interests in a volatile market.
Key Takeaways
- Stricter position limits are now in place for derivatives trading.
- New monitoring protocols will help reduce speculation.
- The Market Wide Position Limit will be updated quarterly.
- Traders must comply with new regulations to avoid penalties.
- Intraday monitoring starts on November 3, 2025.
Mumbai, Sep 30 (NationPress) The Securities and Exchange Board of India (SEBI) has revealed its plan to enforce more stringent position limits in derivatives trading, alongside enhanced monitoring protocols and updated guidelines for stock positions during the ban period, starting from October 1.
The newly introduced measures are designed to minimize excessive speculation and synchronize risk with the activities of the underlying cash market.
The market-wide position limit, which indicates the maximum allowed bets, will now be determined by the cash volume and free float of the security. It has been established as the lesser of 15 percent of free float or 65 times the cash volume across exchanges, according to the markets regulator.
SEBI has disclosed that the Market Wide Position Limit (MWPL) will undergo quarterly updates based on rolling cash volume data. This alignment of MWPL with cash market delivery volume is anticipated to decrease the risk of market manipulation.
“Following entry into the ban period, there should be a reduction in Future Equivalent (FutEq) open interest (OI) at day’s end. For example, if the delta position is (+10) or (-10) at the end of day 1, it could be lowered to 0 by the conclusion of day 2,” SEBI stated regarding another new regulation.
Once the market-wide open interest for any share surpasses 95 percent of the MWPL for that scrip, brokers and traders will only be allowed to trade to reduce their positions through offsetting trades.
The market regulator will also initiate intraday monitoring of MWPL utilization for individual stocks starting November 3, 2025. Clearing corporations will carry out these checks at least four random times during the intraday trading session. Should violations occur, exchanges will take measures, including the application of an additional surveillance margin.
Beginning December 6, 2025, pre-open sessions will be expanded to include F&O to improve trading convenience and liquidity management, mirroring practices in the cash market, the release stated.
Point of View
It is imperative to acknowledge SEBI's proactive approach in reinforcing market integrity through these new measures. While they may impose additional constraints on traders, they are essential in safeguarding against market manipulation and fostering a balanced trading environment.
NationPress
30/09/2025
Frequently Asked Questions
What is SEBI's new position limit?
SEBI's new position limit is determined as the lower of 15% of free float or 65 times the cash volume across exchanges.
When will the new monitoring norms take effect?
The new monitoring norms will take effect starting October 1.
How will the Market Wide Position Limit be updated?
The Market Wide Position Limit will be updated quarterly based on rolling cash volume data.
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 allowed to trade to reduce their positions.
When will intraday monitoring of MWPL start?
Intraday monitoring of MWPL utilization for single stocks will begin on November 3, 2025.
