The Securities and Exchange Board of India (SEBI) has rolled out a new monitoring framework for intraday positions in equity index derivatives, aimed at curbing market manipulation and excessive risk-taking. Effective October 1, 2025, the rules will impact traders and institutions dealing in index options.
What Has Changed in Intraday Trading Rules?
Net Intraday Position Limit Raised: The ceiling per unit in index options has been increased to ₹5,000 crore, up from the earlier ₹1,500 crore.
Gross Intraday Position Limit: Capped at ₹10,000 crore for now.
Separate Monitoring for Long & Short Positions: Limits will apply individually to both sides of the trade.
Focus on Expiry Days: The framework is specifically designed to prevent large-scale speculative positions on derivatives expiry days, which often trigger volatility.
Why SEBI Introduced This Framework
SEBI observed a rising trend of entities creating large intraday “future equivalent” (FutEq) or delta equivalent positions in index options, especially on expiry days. This practice was leading to market instability and threatening the integrity of indices.
The move comes close on the heels of SEBI’s action against US hedge fund Jane Street, which was found manipulating indices by simultaneous bets in cash, futures, and options markets. The regulator has now tightened oversight to prevent such practices.
How Will Monitoring Work?
Stock exchanges will capture at least four intraday snapshots of trading positions.
One mandatory snapshot will be taken between 2:45 pm and 3:30 pm, the period when market activity is typically at its peak.
Any violation of the limits will trigger scrutiny of trading patterns. Exchanges can seek justifications from clients.
Penalties & Deposits: Violators will face penalties and may also be required to pay an additional monitoring deposit, as decided jointly by stock exchanges.
Impact on Traders & Markets
Reduced Excessive Speculation: Traders will find it harder to take outsized bets in index options.
Greater Market Stability: Prevents sudden volatility caused by big intraday positions.
Balance Between Trading & Risk Management: While limits have been expanded, SEBI ensures that risk control mechanisms remain intact.
According to SEBI, the new framework is limited to index options only and is designed to clarify market operations, improve forecasting, and ensure fair play.
Conclusion
With this regulatory tightening, SEBI is striking a delicate balance between ease of trading and investor protection. By widening position limits but introducing stricter surveillance, the watchdog is ensuring that India’s derivatives market remains transparent, orderly, and resilient against manipulation.
📌 From October 1, intraday traders in index options will need to rethink strategies and stay within the new ₹5,000 crore net cap—or risk facing penalties.
