SEBI Enhances Equity Derivatives Risk Controls and Trading Norms

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  • Last Updated on 31 May, 2025

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SEBI equity derivatives measures

Circular No. SEBI/HO/MRD/TPD-1/P/CIR/2025/79; Dated: 29.05.2025

The Securities and Exchange Board of India (SEBI) has announced a set of new measures aimed at improving trading convenience and strengthening risk monitoring mechanisms in the equity derivatives segment. These changes reflect SEBI’s continued commitment to fostering a more transparent, efficient, and secure market environment.

1. Key Regulatory Enhancements Introduced

1.1 Delta-Based Open Interest (OI) Calculation

SEBI will now mandate a Delta-Based Open Interest (OI) computation model for derivatives contracts.

  • This approach aligns position tracking with actual risk exposure, considering the sensitivity of option prices to underlying movements.
  • It offers a more precise method to gauge market positions, particularly in complex options strategies.

1.2 Redefined Market-Wide Position Limits (MWPL)

The Market-Wide Position Limits (MWPL) for index futures and index options are being redefined.

  • The aim is to ensure that limits are reflective of market dynamics and index composition.
  • This helps avoid concentration risks and supports fair participation across investor classes.

1.3 Trading Restrictions During Ban Periods

New trading restrictions will be enforced during ban periods for specific securities:

  • These restrictions are designed to prevent excessive speculative activity.
  • They safeguard against potential market manipulation and systemic risks arising from breached limits.

1.4 Eligibility Criteria for Derivatives on Non-Benchmark Indices

SEBI has also set eligibility norms for derivatives contracts based on non-benchmark indices.

  • These criteria will assess factors such as liquidity, investor participation, and index robustness.
  • The goal is to ensure that only indices with sufficient depth and market relevance are permitted for derivative trading.

2. Objective Behind the Measures

These steps are intended to:

  • Improve risk assessment and surveillance
  • Enhance market integrity and investor protection
  • Foster a more efficient derivatives trading framework
  • Align with global best practices in derivatives markets

3. Strengthening Regulatory Oversight

By introducing these measures, SEBI continues to evolve India’s capital markets through:

  • Data-driven supervision
  • Adaptive risk controls
  • Transparent regulatory frameworks

These developments are expected to bolster market confidence and support sustainable growth in the equity derivatives segment.

Click Here To Read The Full Circular

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied