The Securities and Exchange Board of India (SEBI) is gearing up for a major round of discussions that could impact how index options are traded in the Indian stock market. A crucial SEBI committee on secondary market regulations is scheduled to meet on May 7, where it will deliberate on two key issues \u2014 index options limit and the uniformity of expiry days across exchanges.<\/p>\n
\ud83d\udc49 These discussions are significant for a large segment of market participants, including brokers, foreign institutional investors (FIIs), high-frequency traders (HFT), and the exchanges themselves.<\/p>\n
According to sources familiar with the development, the panel \u2014 which consists of representatives from stock exchanges, depositories, brokers, and government officials, will also review the feedback received on SEBI\u2019s earlier proposals. Once the discussions are complete, SEBI may issue a final circular, which could set new norms for the F&O (Futures and Options) segment.<\/p>\n
The central concern revolves around intraday trading limits on index options, particularly those calculated using the Future Equivalent<\/em> (FutEq) or delta equivalent<\/em> method.<\/p>\n FutEq measures the impact of price changes on an option position and gives a better estimate of the real exposure.<\/p>\n<\/blockquote>\n Market insiders say that algo traders and FPIs are demanding higher intraday limits, with proposals ranging between \u20b95,000 to \u20b915,000 crore. Their concern is that lower limits could lead to penalties for limit breaches, even when the risk is managed.<\/p>\n However, SEBI, through a consultation paper released in February, highlighted the risks of its current monitoring system. This system allows entities to hold large long and short notional positions that cancel each other out \u2014 even when the actual risk, based on delta, remains high.<\/p>\n \ud83d\udca1 SEBI has proposed the following new limits for index options:<\/strong><\/p>\n Net intraday limit: \u20b91,000 crore<\/p>\n<\/li>\n Gross intraday limit: \u20b92,500 crore<\/p>\n<\/li>\n Net EoD (End of Day) limit: \u20b9500 crore<\/p>\n<\/li>\n Gross EoD limit: \u20b91,500 crore<\/p>\n<\/li>\n<\/ul>\n For index futures:<\/p>\n EoD limit: Proposed to rise from \u20b9500 crore to \u20b91,500 crore<\/p>\n<\/li>\n Intraday limit: \u20b92,500 crore<\/p>\n<\/li>\n<\/ul>\n These proposed limits reflect the three-fold rise in market indices and trading volumes since the last revision in March 2020.<\/p>\n In a November 2024 study, SEBI reviewed the top 50 entities by open interest and found that most stayed within the \u00b1\u20b9500 crore range in net FutEq terms. However, in 1% of the cases, entities held delta risk exceeding \u20b910,000 crore \u2014 a significant risk that wasn\u2019t visible through notional netting alone.<\/p>\n To get a broader perspective, SEBI is now analysing April’s open interest data before making a final decision.<\/p>\n The second major proposal concerns standardising the expiry days of equity derivatives. As per SEBI\u2019s March 27 draft circular:<\/p>\n Exchanges can pick either Tuesday or Thursday for all their derivatives expiries.<\/p>\n<\/li>\n Only one weekly benchmark index options contract is allowed on the chosen day.<\/p>\n<\/li>\n All other equity derivatives (excluding benchmark index options) will expire in the last week of the month \u2014 on either the selected Tuesday or Thursday.<\/p>\n<\/li>\n<\/ul>\n This move aims to reduce crowding of expiries, minimise risk, and allow exchanges to offer distinct products.<\/p>\n<\/blockquote>\n SEBI believes that spreading expiries through the week can reduce concentration risk and bring more order to derivatives trading.<\/p>\n However, opinions are divided. While some market players have asked for a 3-day expiry model, others believe SEBI should not fix expiry days at all, and that the choice should lie with the exchanges.<\/p>\n To ensure discipline, SEBI has also proposed that exchanges must get prior approval before making any changes to their expiry days.<\/p>\n All eyes are now on the May 7 panel meeting, where SEBI is expected to make significant progress on these long-pending matters. The final decisions could reshape F&O trading norms, particularly for index options and futures.<\/p>\n \ud83d\udce2 SEBI\u2019s move could bring more transparency and risk control in the derivatives market, which has seen massive growth in recent years.<\/em><\/p>\n<\/blockquote>\n An email sent to SEBI seeking comments has so far not received a response.<\/p>\n","protected":false},"excerpt":{"rendered":" The Securities and Exchange Board of India (SEBI) is gearing up for a major round of discussions that could impact how index options are traded in the Indian stock market. A crucial SEBI committee on secondary market regulations is scheduled to meet on May 7, where it will deliberate on two key issues \u2014 index […]<\/p>\n","protected":false},"author":2,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[615],"tags":[],"ppma_author":[1329],"class_list":{"0":"post-7833","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-stock-market-news"}," _eael_post_view_count":0,"authors":[{"term_id":1329,"user_id":2,"is_guest":0,"slug":"snehagandhi","display_name":"Sneha Gandhi","avatar_url":{"url":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/10\/Sneha-Gandhi.jpeg","url2x":"https:\/\/trending.niftytrader.in\/wp-content\/uploads\/2025\/10\/Sneha-Gandhi.jpeg"},"0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":""}],"_links":{"self":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/7833","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/comments?post=7833"}],"version-history":[{"count":1,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/7833\/revisions"}],"predecessor-version":[{"id":7835,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/posts\/7833\/revisions\/7835"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media\/7834"}],"wp:attachment":[{"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/media?parent=7833"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/categories?post=7833"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/tags?post=7833"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.niftytrader.in\/markets\/wp-json\/wp\/v2\/ppma_author?post=7833"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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\ud83e\uddee What Did SEBI Find?<\/h3>\n
\ud83d\udcc5 Expiry Days: Tuesday or Thursday<\/h3>\n
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\ud83d\udccc What\u2019s Next?<\/h3>\n
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