Sebi Eases Intraday Monitoring Norms For Index Derivatives - New Guidelines Comes Into Effect From April 1

The capital markets regulator Securities and Exchange Board of India (Sebi) has announced that from April 1, 2025, stock exchanges will be required to monitor position limits for equity index derivatives not only at the end of the day but also throughout the trading day. However, the regulator clarified that no penalties will be charged for breaching these limits until further directions are issued.

Under the new guidelines, exchanges will need to capture at least four position snapshots during the day. “The number of snapshots may be decided by the respective Stock Exchanges subject to a minimum of 4 snapshots in a day. The snapshots would be randomly taken during pre-defined time windows,” said Sebi in a recent consultation paper.

Sebi’s move comes in response to concerns raised by industry associations, who highlighted challenges related to the readiness of system at the end of stock brokers and their clients  to  monitor  existing  position  limits intraday for index derivatives.

Further, industry associations have also been concerned that the market ecosystem is in the process  of putting  in  place necessary systems keeping in  mind the proposed delta based or futures equivalent limits for index derivatives. Accordingly, in the interim, implementing systems for existing position limits that are based on notional activity of client or trading member could put additional strain on the market participants.

Further, in the said consultation paper, higher intraday limits are proposed compared to end of day limits which is not the case with existing limits. Thus, systems developed based on the existing parameters may become obsolete once the proposals contained in the consultation paper attains finality and are implemented.

Further, exchanges will have to develop and circulate a joint Standard Operating Procedure (SOP) intimating market participants on how intraday monitoring will be conducted, and intimate such breaches to clients or trading members for their risk monitoring.