SEBI eases intraday-limit norms; only monitoring from April 1, no penalty for breach

(Representational image)

The market regulator has relaxed norms for monitoring of intraday position limits for exchanges and clearing corporations.

In a circular issued on March 28, the Securities and Exchange Board of India (SEBI) has said that they need to only monitor the limits by taking a minimum of four snapshots during the trading day, and they do not have to impose a penalty for breaching the position limits until further directions.

On December 30, 2024, the regulator had asked exchanges and CCs to monitor intraday limits, and impose penalty for breaching them.

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The circular had said the following:

1. In addition to the End of Day monitoring mechanism as stated above, the position limits, for equity index derivative contracts, would also be monitored on an intraday basis from April 01, 2025.

2.For this purpose, Stock Exchanges shall consider minimum 4 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.

3.Further, the existing framework of penalty structure for breach of end of day position limit shall be extended by exchanges for intraday position limit breaches as well.

But after industry representations were made, the regulator decided that only the first two directives needed to be complied with by April 1, 2025.

The circular said, " Industry Associations (ANMI, BBF and CPAI) have raised concerns pertaining to the readiness of systems at the end of stock brokers and their clients to monitor existing position limits intraday for index derivatives. Further, the concern of industry associations has also been 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 as stated in the SEBI consultation paper dated February 24, 2025. Accordingly, in the interim, implementing systems for existing position limits that are based on notional activity of client / 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."