SEBI re-introduces intraday limits for Index Options trading from October 1; What's changing?

The Securities and Exchange Board of India (SEBI) has decided to reintroduce intraday position limits in equity index options trading from October 1, 2025, to curb outsized bets and ensure orderly trading, particularly on expiry days.

According to a circular issued late Monday, SEBI said each entity will now be subject to an intraday net position limit of ₹5,000 crore on a futures-equivalent (FutEq) basis, compared to the end-of-day limit of ₹1,500 crore.

Similarly, the intraday gross position limit has been fixed at ₹10,000 crore, the same as the existing end-of-day ceiling.

The market regulator said the limits will be monitored by stock exchanges through a minimum of four random snapshots during the trading day, including one closer to market closing, when trading activity is typically heightened.

The move comes after SEBI observed instances of “outsized intraday FutEq positions created by certain entities in index options on the day of contract expiry,” which, it said, posed risks to market integrity.

SEBI said that entities breaching the prescribed limits will face closer scrutiny of their trading patterns.

“For the entities breaching the aforesaid limits, Stock Exchanges shall examine trading patterns of such entities which would inter-alia include seeking rationale for such positions from the clients, examining trading in the constituents of the index by the entity and discussing such instances with SEBI in the surveillance meeting,” the circular read.

On expiry days, such breaches will additionally attract penalties or an additional surveillance deposit, effective from December 6, 2025, after the completion of the glide path for revised position limits.

Exchanges will also allow participants to take additional exposure against eligible collateral such as securities or cash equivalents, SEBI said.

The framework, applicable only to index options, is expected to provide “predictability, operational clarity and a fair balance between ease of trading and risk management,” the regulator noted.

Stock exchanges and clearing corporations have been directed to prepare a joint Standard Operating Procedure (SOP) within 15 days and circulate it to market participants ahead of the new rules kicking in.

The revised intraday monitoring framework will come into force from October 1, 2025, while expiry-day penalty provisions will apply from December 6, 2025.