In a bid to enhance trading safety and market integrity, the Securities and Exchange Board of India (SEBI) has rolled out a robust new framework for intraday monitoring of position limits in equity index derivatives. The circular, issued on September 1, 2025, comes as a response to growing concerns over oversized intraday positions taken by certain market participants, especially on index options expiry days.
The new guidelines aim to tighten intraday risk monitoring, while still enabling active participation by traders, institutions, and market makers.
Background and Industry Consultation
SEBI’s move follows its earlier consultation paper dated February 24, 2025, which proposed enhanced intraday position limits under a Future Equivalent (FutEq) framework. The objective was twofold:
- Strengthening risk controls, especially during volatile periods like expiry days.
- Improving market convenience and transparency for all participants.
Following feedback from market participants and discussions within SEBI’s Secondary Market Advisory Committee (SMAC), a phased implementation was recommended.
The earlier circular dated May 29, 2025, had already introduced end-of-day limits:
- Net FutEq limit: ₹1,500 crores
- Gross FutEq limit: ₹10,000 crores
These were scheduled for full implementation by December 6, 2025, following a glide path starting July 1, 2025.
However, no specific intraday limits had been defined until now. Monitoring was limited to random snapshots by exchanges for surveillance purposes.
Why Intraday Limits Are Necessary
SEBI noted multiple instances where entities took outsized intraday positions, particularly on expiry days—a time when market volatility and sensitivity are naturally high. Such positions posed potential risks to market stability and fair price discovery.
To address these concerns, SEBI held consultations with stock exchanges and formulated a clear, enforceable framework for intraday position monitoring.
Key Highlights of the New Framework
Effective immediately, the following intraday limits apply to each trading entity in index options (on a FutEq basis):
Intraday Net Position Limit: ₹5,000 crores
This is over 3x higher than the end-of-day net limit (₹1,500 crores), allowing reasonable flexibility for dynamic trading during the day.
Intraday Gross Position Limit: ₹10,000 crores
This is equal to the end-of-day gross limit, and applies separately to both long and short positions.
Snapshot-Based Monitoring
Stock exchanges will conduct a minimum of four random snapshots during each trading session to monitor compliance. At least one snapshot must be taken between 14:45 and 15:30 hrs, when trading activity peaks due to expiry dynamics and closing trades.
Price-Adjusted Monitoring
While capturing snapshots, exchanges must consider the underlying index price at the time to ensure fair and real-time valuation of positions.
Balancing Flexibility with Risk Controls
The updated framework reflects SEBI’s approach to balance flexibility for active traders—including market makers and liquidity providers—with the need for systemic safeguards. The high intraday limits still permit significant activity, but within a defined risk perimeter.
This move is especially relevant as India’s equity derivatives market grows in depth and participation. It ensures that aggressive position-building on expiry days doesn’t distort markets or pose systemic risks.
What Market Participants Should Do
Entities trading in index options must now enhance their intraday risk monitoring systems, align with the new limits, and be prepared for real-time oversight. Those exceeding limits risk regulatory action or forced unwinding by exchanges.
As the December 2025 deadline for full implementation of position limit regulations approaches, this circular adds an important layer of intraday surveillance, reinforcing SEBI’s commitment to fair, transparent, and stable markets.