The Securities and Exchange Board of India (SEBI) has mandated stock exchanges to begin monitoring position limits in index derivatives on an intraday basis starting April 1, 2025. However, to address industry concerns, the regulator has clarified that no penalties will be imposed for intraday breaches until further notice.
Exchanges will be required to capture at least four random snapshots of positions throughout the trading day, although they are free to increase the number of checks. These measures aim to improve surveillance and ensure market stability during active trading hours.
Industry Response and Readiness Challenges
The decision to delay penalties stems from concerns raised by stockbrokers and clients, who highlighted readiness challenges related to real-time monitoring of position limits. Market participants are still adjusting to changes proposed in SEBI’s February 2025 consultation paper, which outlined the introduction of delta-based or futures-equivalent position limits for index derivatives.
SEBI acknowledged the transitional difficulties in its circular and stated that implementing notional intraday limits could burden participants, especially as higher intra-day thresholds have been proposed compared to end-of-day limits.
New Risk Management Framework Proposed
In its earlier consultation, SEBI proposed a comprehensive update to position limit norms to improve trading efficiency and market risk management. For index options, SEBI suggested end-of-day limits of ₹500 crore (net) and ₹1,500 crore (gross), with intra-day limits of ₹1,000 crore and ₹2,500 crore, respectively. For index futures, end-of-day limits are raised from ₹500 crore to ₹1,500 crore, and intra-day limits are set at ₹2,500 crore.
These thresholds will apply uniformly to foreign portfolio investors (FPIs), mutual funds, proprietary traders, and retail clients, providing a standardized framework for risk containment.
Also read: SEBI to Overhaul Legacy Rules for Smarter Regulation
Fast-Track FPO Guidelines for REITs and InvITs
In a parallel move, SEBI has introduced guidelines for fast-track follow-on public offers (FPOs) by Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). These new rules include lock-in periods for sponsors receiving units through preferential issues: three years for 15% of the allotment, and one year for the remaining portion.
The framework, which comes into immediate effect, also details disclosure norms, offer documentation, and listing requirements. For REITs and InvITs to proceed with an FPO, in-principle stock exchange approval is required, followed by filings with SEBI through merchant bankers.
By enabling easier access to follow-on capital, the updated mechanism is expected to support long-term infrastructure and real estate financing needs.
