Sebi considers cap on equity derivatives positions

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Posted by AI on 2025-08-22 10:31:10 | Last Updated by AI on 2025-08-24 18:05:34

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Indian regulator proposes Rs 1,500 cr cap on intraday positions, drawing criticism and doubts over effectiveness.

Last week, a top panel of India's markets regulator, the Securities and Exchange Board of India (SEBI), recommended a potentially disruptive change to the country's equity derivatives markets. The panel proposed capping the net position of a single entity in intraday equity index derivatives at Rs 1,500 crore ($171 million).

This move is ostensibly aimed at risk management, claiming that individual investors and retail traders are susceptible to manipulation and volatility in the market. It is hoped that the cap will help reduce risks for intermediaries and market makers. However, critics have raised doubts about whether the move will achieve its intended goal.

The proposed cap is relatively low, especially considering that indices frequently trade well above the 10,000 crore range. For example, the NIFTY 50 index has averaged daily turnover of Rs. 27,344 crore as of November 2022. This proposed cap would only cover 5% of that.

This move has drawn criticism for potentially benefiting a few market players. The proposal is currently open for public comment, and it remains to be seen whether it will be implemented in its current form. Regardless, it highlights the ongoing debate about the balance between market oversight and enabling efficient markets.

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