SEBI Proposes ₹1,500-Crore Cap on Intraday Derivatives to Safeguard Retail Investors

Fast Summary

• Proposal by SEBI: The Securities and Exchange Board of India (SEBI) is considering a Rs 1,500 crore cap on net intraday equity index derivative positions to curb excessive speculation and protect market fairness.
• Concerns Raised: the move addresses manipulative trading strategies by global high-frequency firms that have caused retail investor losses. Some entities are found to exceed existing end-of-day limits during contract expiry days.
• Existing Limits vs Proposal: Current rules allow an end-of-day net cap of Rs 15,000 crore and gross exposure of up to Rs 1 lakh crore, but lack clear intraday thresholds. Earlier plans for a Rs 10,000 crore ceiling were withdrawn due to pushback from large market-making firms.
• Oversight Measures Suggested: SEBI’s committee advises tighter rules for trades conducted by connected foreign entities through intermediaries. Defined benchmarks are expected to enable exchanges in imposing penalties for violations.
• Approval Status: The proposal has been forwarded to SEBI’s board but awaits final approval.

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