SEBI Increases Position Limits for Trading Members in Index Futures and Options to Rs 7,500 Crore

The Securities and Exchange Board of India (Sebi) has announced a significant increase in the position limits for trading members (TMs) in index futures and options contracts. The new limit is now set at Rs 7,500 crore or 15% of the total open interest (OI) in the market, whichever amount is higher. Previously, this limit was only Rs 500 crore or 15% of the total OI.

🚨 SEBI new rule means that traders dealing with index futures and options (F&O) can only hold positions up to a certain limit. This limit is either 75 billion rupees or 15% of the total number of contracts (open interest) in the market, whichever is smaller.

According to… https://t.co/NqeecJPLrd pic.twitter.com/SsnnHoHJ9d

— BigBreakingWire (@BigBreakingWire) October 15, 2024

In a circular issued on October 15, Sebi clarified that this overall position limit for TMs, which combines both proprietary and client trades, applies separately to all open positions in index futures and options contracts. The decision was made following feedback from market participants, discussions in the Secondary Market Advisory Committee (SMAC), and internal deliberations.

The circular also mentioned that the method for monitoring these position limits will change, effective from April 1, 2025. Under the new monitoring system, positions in the equity derivatives segment, including both index and stock derivatives, will be evaluated based on the total open interest at the end of the previous trading day.

Additionally, the circular highlights a provision for “passive breaches.” If the total open interest in the market decreases compared to the previous day’s OI, market participants may exceed the specified position limits without facing penalties, even if their positions remain unchanged throughout the trading day. This means that they won’t have to sell off their positions in such cases.