Market regulator Securities and Exchange Board of India (SEBI) believes that a major regulatory shakeup is not required to prevent Jane Street like matters as such instances can be dealt with strong and effective enforcement actions, said a SEBI source.
“Better enforcement of existing regulations can in fact pave the way for optimal regulation. On the flip side, more regulations cannot make up for poor enforcement,” said a SEBI source.
Another source said that SEBI is confident that its surveillance and enforcement tools are good enough to prevent such practices in future. Also, after ithe mplementation of new Future & Options norms from July 1 SEBI and exchanges will be able to track the trading positions in a better manner. SEBI had implemented Future Equivalent or delta-based monitoring of positions from July 1. The source further added, “In the last round of consultations around F&O phase 2 regulations, we did away with the proposal around intraday limits on index options positions, because we were confident that we could achieve the desired objectives with better surveillance and enforcement. This order clearly demonstrates and underscores this”.
SEBI had ordered a total of 9 measures for the equity derivatives segment as part of F&O 2.O norms after the first round of reforms from October 1, 2024 to curb the volatility on expiry days. The 9 measures were as follows:
New way of looking Open Interest
SEBI measures included a new way of looking at Open Interest (OI), OI is now being measured based on FutEq or delta-based OI. FutEq OI considers the price sensitivity of each contract. As OI is now being measured by sentimentally aggregating the delta-adjusted open positions across F&O at a given point in time.
Linkage of MWPL with cash volume and free float
From October 1, market wide position limit (MWPL) will be linked to the cash volume and free float. It is now fixed as lower of, 15 per cent of free float and 65 times of cash volume across exchanges.
Position Creation in Single Stocks During Ban Period
From October 1, 2025, trades will be allowed in stocks even during ban period if it reduces the risk of a portfolio. SEBI said that subsequent to its entry in the ban period, it should result in a reduction of FutEq OI on an end-of-day basis.
Intraday monitoring of MWPL utilisation for Single Stocks
From November 3, 2025, clearing corporations will perform intraday monitoring of FutEq OI at least four random times during the trading session. Exchanges will take appropriate actions once OI utilization breaches certain limits such as levying Additional Surveillance Margin, monitoring for entity level concentration, additional surveillance checks etc.
Index options position limit hiked, monitoring to be tightened
Also, SEBI enhanced the Index Options position limit to Rs 10,000 crore from the earlier proposed limit of Rs 1,500 crore while net end-of-the-day limit was enhanced to Rs 1,500 crore from the earlier proposed Rs 500 crore. Also, intra-day limits were removed. Revised net end of day limit for options is now Rs 1,500 crore and gross limit is Rs 10,000 crore.
Eligibility criteria for derivatives on non-benchmark Indices
SEBI has also fixed a new eligibility criterion for F&O on non-bench mark indices. As per the new criteria for derivatives on non-bench mark indices a minimum of 14 constituents will be must. Capping weightage of top stock at or below 20 percent and combined weightage of top three constituent’s at or below 45 per cent has been prescribed. This will be effective from November 3, 2025.
Individual Entity Level Position Limits for Single Stocks
For individuals the limit for single stocks has been fixed as 10 per cent of MWPL and a trading limit of 20 per cent has been prescribed for proprietary brokers. For FPIs and brokers over all limit of 30 per cent has been fixed. This will be effective from October 1, 2025.
Pre-Open session for F&O
Like the cash market there will be Pre-open session for F&O also. Pre-open session will be extended to current-month futures contracts on both single stocks and indices, mirroring the modalities of the cash market’s pre-open and post-closing sessions. This will be effective from December 6, 2025.
MFs, AIFs Options exposure on FutEq basis
SEBI has suggested that Mutual Funds and Alternative Investment Funds should calculate Options exposure both long and short on FutEq basis. The respective departments of SEBI will issue separate circular for this.
SEBI has taken multiple measures to deal with F&O frenzy in recent years. Including reducing the number of weekly option expiries, increasing lot sizes, removing calendar spread benefit on expiry day, upfront collection of premiums from option buyers and intraday monitoring of position limits.
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