The Securities and Exchange Board of India (SEBI) has tightened rules for intraday positions in the equity derivatives segment to curb excessive speculation and potential market manipulation, especially on options expiry days.
Under the revised framework, the intraday net position limit for index options has been raised to Rs5,000 crore per entity from Rs1,500 crore earlier, calculated using the recently-introduced futures-equivalent (FutEq) methodology after offsetting long and short trades. The gross position limit remains at Rs10,000 crore — applied separately to the long and short sides.
SEBI also asked stock exchanges to strengthen real-time surveillance and monitoring for large speculative positions, ensuring that oversized expiry-day bets are flagged promptly. The changes follow SEBI’s recent scrutiny of high-frequency trading firm Jane Street for aggressive expiry-day deals.
The higher thresholds are expected to provide better flexibility to institutions, support liquidity providers and maintain market stability through tighter real-time surveillance, said Ajay Garg, CEO, SMC Global Securities. “It will curb excessive speculation, enhance real-time risk management, and reinforce market stability, thereby creating a secure trading environment for retail participants,” he said.
random checks
Stock exchanges have been directed to conduct at least four random checks of traders’ positions during the trading session. One snapshot must be taken between 2.45 pm and 3.30 pm when trading activity typically peaks due to expiry-related adjustments. The value of positions will be calculated using the underlying index price at the time of each snapshot.
Entities breaching limits will face tighter scrutiny as exchanges may call for explanations, review trading patterns in index constituents and report cases to SEBI for further surveillance. On expiry days, violations could attract penalties or additional surveillance deposits, effective December 6, 2025.
To benefit investors
“Retail investors are expected to benefit indirectly from the reduced expiry-day volatility and better price discovery,” said Rupak De, Senior Technical Analyst at LKP Securities.
Another derivatives analyst expects volumes to pick up once the market adapts to the higher limits but sees a near-term dip in options volumes. The F&O segment is expected to stay under pressure and SEBI scrutiny until the Jane Street investigation is wrapped up.