Mumbai— The Securities and Exchange Board of India (SEBI) has introduced a new set of regulations for the equity Futures and Options (F&O) segment, aimed at increasing market transparency, curbing excessive speculation, and strengthening overall stability.
A key change includes a revised method for monitoring open interest (OI)—the total number of outstanding contracts in futures or options. SEBI will now track OI levels throughout the trading day, particularly for single stock futures and options, instead of waiting for end-of-day data. This is expected to help identify speculative build-ups more promptly.
SEBI also announced it will link the market-wide position limit (MWPL)—the cap on open contracts for a particular stock in the F&O market—to the stock’s cash market volume and free float. This move is intended to prevent undue speculation in less liquid stocks.
To support meaningful participation in broader market indices while minimizing the risk of manipulation, SEBI has raised position limits for Index Futures and Index Options. For Index Options, the net end-of-day position limit for futures-equivalent open interest (FutEq OI) will be set at ₹1,500 crore, while gross long or short positions cannot exceed ₹10,000 crore each.
Position limits for Index Futures will vary by participant category. For Category I Foreign Portfolio Investors (FPIs), mutual funds, and brokers (including proprietary and client trades), the limit will be the greater of ₹500 crore or 15% of the total futures open interest. For Category II FPIs—excluding individuals, family offices, and corporates—the cap will be ₹500 crore or 10% of open interest, whichever is higher. Brokers, including proprietary and client accounts combined, will be limited to 15% of open interest or ₹7,500 crore, whichever is lower.
SEBI emphasized that these F&O position limits are independent of any equity holdings in the cash market.
The new regulations are designed to promote a more transparent and efficient derivatives market while reducing systemic risk, and are part of SEBI’s broader push to ensure long-term market integrity. (Source: IANS)
