As of May 12, 2025, the Securities and Exchange Board of India (SEBI) is poised to implement significant changes to index options trading regulations. While some proposed restrictions have been relaxed, SEBI remains vigilant about retail investor activity in the derivatives market.

• Relaxation of Position Limits: SEBI plans to increase the net end-of-day position limit for index options to ₹1,500 crore and the gross limit to ₹10,000 crore per side. This is a substantial rise from the earlier proposed limits of ₹500 crore net and ₹1,500 crore gross.
• Exemption for Intraday Trading: Intraday trading in index options is likely to remain exempt from these position limits. Instead, SEBI will implement enhanced surveillance measures, monitoring intraday positions up to four times daily to detect potential market manipulation.
• Adoption of Delta-Based Open Interest Calculation: SEBI is set to adopt a delta-based framework for calculating open interest (OI) in derivatives. This method aims to provide a more accurate assessment of market exposure by considering the sensitivity of option prices to movements in the underlying assets.
• Continued Scrutiny of Retail Participation: Despite previous regulatory measures, SEBI has observed that individual trading activity in index options remains high. The regulator is re-examining this trend and may introduce further actions to protect investors and ensure market stability.

These developments reflect SEBI’s ongoing efforts to balance market integrity with investor protection. By adjusting position limits and enhancing surveillance, the regulator aims to curb excessive speculation while supporting legitimate trading activities.

Sources