August 23, 2025

Hold onto your seats! India’s market regulator is cooking up new rules to keep the stock market fair and square. A top panel from SEBI, the Securities and Exchange Board of India, has recommended that each trading entity should not hold intraday equity index derivatives net positions beyond Rs 1,500 crore (which is about $172 million). The goal? To stop tricky, manipulative trading strategies and protect everyday investors from sudden losses. Why now? Recently, SEBI hit the brakes on Jane Street, a big U.S. high-frequency trading firm, banning it temporarily for using manipulative trades that hurt retail investors. This stirred things up and made the watchdog rethink its rules for equity derivatives—the fancy financial instruments linked to stock indexes. Back in February, SEBI had floated an idea to limit intraday net index derivative positions at Rs 1,000 crore, but big market players said “No way!” and the plan was dropped. Instead, SEBI told stock exchanges to keep a close eye on how big firms move their positions during the day. The new Rs 1,500 crore cap was discussed by SEBI’s secondary market advisory committee and is now waiting for the final thumbs-up from the SEBI board. Sources explained, "Our data shows that on days when index derivatives mature, intraday trading spikes beyond regular end-of-day limits. So, having an intraday cap is not just important, it’s essential!" Currently, an entity’s net position at the end of the day can’t exceed Rs 1,500 crore, and their gross position is capped at Rs 10,000 crore. But intraday positions sometimes jump over these numbers, creating risk and confusion. Stock exchanges also wanted clear guidelines on when to start watching trades closely and take action. One insider said, "A regulatory set limit will make it clear to exchanges when to initiate penal action," meaning firms breaking the rules on expiry days will face penalties and be reported to SEBI. On top of that, the panel has recommended tougher rules for trading members to track foreign entities that trade through intermediaries. These limits are meant to block any sneaky backdoor moves, although the exact details are still under wraps. So, the message is clear: SEBI wants fairness, more transparency, and fewer tricks that make the stock market a wild jungle for retail investors. If approved, these new limits will bring a fresh order and protect small players from getting lost in the chaos of high-speed, big-money trades!

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Tags: Sebi, Intraday trading, Equity derivatives, Market regulation, Trading limits, Retail investors,