1. Why the Change?
- The Indian derivatives market (futures and options) has seen explosive growth in the past few years.
- A large portion of this volume comes from short-term, high-risk intraday trades rather than long-term hedging or investment.
- SEBI (the market regulator) is tightening the rules to reduce systemic risk and prevent excessive speculation that could destabilize markets.
2. New Limits Introduced
- Net Intraday Position Limit:
- Each trading entity (broker, fund, or proprietary trader) can now take intraday index option positions worth up to ₹50,000 crore.
- Earlier, the end-of-day cap was ₹15,000 crore, meaning traders could build up huge positions intraday but reduce them before close. Now SEBI is directly restricting intraday exposure, not just the closing balance.
- Gross Exposure Cap:
- Gross intraday exposure (total positions without netting) is capped at ₹100,000 crore (₹1 lakh crore).
- This prevents traders from excessively hedging one position with another, creating huge notional exposures.
