Mumbai: The Securities and Exchange Board of India (SEBI) has announced that it will implement stricter position limits in derivatives trading, enhanced monitoring, and revised norms for positions in a stock during the ban period, effective from October 1. The new measures aim to curb excessive speculation and align risk with the underlying cash market activity. The market-wide position limit, or the maximum number of allowed bets, will now be linked to the cash volume and free float of the scrip, fixed at the lower of 15 percent of free float or 65 times the cash volume across exchanges, according to the markets regulator.
SEBI stated that the Market Wide Position Limit (MWPL) will be updated quarterly based on rolling cash volume data. SEBI anticipates that linking the MWPL to cash market delivery volume may also help reduce the risk of manipulation. “Following its entry into the ban period, this should lead to a reduction of Future Equivalent (FutEq) open interest (OI) by the end of the day. For example, if the delta position is (+10) or (-10) at the end of day one, it could be brought down to 0 by the end of day two,” SEBI remarked regarding another new regulation.
Once the market-wide open interest for any share surpasses 95 percent of the MWPL for that scrip, brokers and traders will be permitted to trade only to reduce their positions through offsetting transactions. The market regulator will also introduce intraday monitoring of MWPL utilization for single stocks beginning November 3, 2025. Clearing corporations will perform these checks at least four random times during the intraday trading session.
