The Securities and Exchange Board of India (SEBI) has issued a circular, SEBI/HO/MRD/TPD-1/P/CIR/2025/41, dated March 28, 2025, addressing the intraday monitoring of position limits for index derivatives. The circular outlines a temporary modification to the implementation of intraday monitoring, originally mandated in the SEBI Master Circular dated December 30, 2024. While exchanges are still required to monitor position limits intraday from April 1, 2025, as planned, penalties for breaches will be suspended until further notice.
The decision stems from concerns raised by industry associations, including the Association of National Exchanges Members of India (ANMI), the Bombay Brokers’ Forum (BBF), and the Confederation of Professional Associations of India (CPAI). These associations cited the lack of readiness in broker and client systems to handle intraday monitoring of existing notional position limits. They also pointed to SEBI’s ongoing consultation regarding delta-based or futures-equivalent limits for index derivatives, suggesting that implementing systems based on current parameters could lead to obsolescence. The consultation paper proposes higher intraday limits than end-of-day limits which are not in line with the current position limits.
According to the circular, stock exchanges are instructed to implement intraday monitoring by taking at least four position snapshots throughout the trading day, as stipulated in the original master circular. However, SEBI has explicitly stated that no penalties will be levied for intraday breaches of existing position limits, and these breaches will not be considered violations. Exchanges are also required to develop a joint Standard Operating Procedure (SOP) to inform market participants about the modalities of intraday monitoring and to notify clients and trading members of any breaches for risk management purposes.
This directive is issued under the authority granted by Section 11(1) and Section 11(2)(a) of the SEBI Act, 1992, and Regulation 51 of the SECC Regulations, 2018, aimed at protecting investor interests and regulating the securities market. The circular emphasizes that this temporary suspension of penalties is intended to allow market participants time to adapt to the upcoming regulatory changes and to ensure a smooth transition. The document is available on the SEBI website for further reference.
Securities and Exchange Board of India
Circular No. SEBI/HO/M RD/TPD-1/P/CI R/2025/41 Dated: March 28, 2025
To
All Stock Exchanges
All Clearing Corporations
(Except Commodity Derivatives Exchanges and Clearing Corporations)
Dear Sir/ Madam,
Subject: Intraday Monitoring of Position Limits for Index Derivatives
1. Clause 1.3.4 of SEBI Master Circular dated December 30, 2024 for Stock Exchanges and Clearing Corporations stipulates the following with regard to Intraday Monitoring of Position Limits for Index Derivatives:
1.3.4 Intraday monitoring of position limits
1.3.4.1 In addition to the End of Day monitoring mechanism as stated above, the position limits, for equity index derivative contracts, would also be monitored on an intraday basis from April 01, 2025.
1.3.4.2 For this purpose, Stock Exchanges shall consider minimum 4 position snapshots during the day. The number of snapshots may be decided by the respective Stock Exchanges subject to a minimum of 4 snapshots in a day. The snapshots would be randomly taken during pre-defined time windows.
1.3.4.3 Further, the existing framework of penalty structure for breach of end of day position limit shall be extended by exchanges for intraday position limit breaches as well.
2. With regard to the aforesaid, Industry Associations (ANMI, BBF and CPAI) have raised concerns pertaining to the readiness of systems at the end of stock brokers and their clients to monitor existing position limits intraday for index derivatives. Further, the concern of industry associations has also been that the market ecosystem is in the process of putting in place necessary systems keeping in mind the proposed delta based or futures equivalent limits for index derivatives as stated in the SEBI consultation paper dated February 24, 2025. Accordingly, in the interim, implementing systems for existing position limits that are based on notional activity of client / trading member could put additional strain on the market participants. Further, in the said consultation paper, higher intraday limits are proposed compared to end of day limits which is not the case with existing limits. Thus, systems developed based on the existing parameters may become obsolete once the proposals contained in the consultation paper attains finality and are implemented.
3. In view of the aforesaid concerns, the following has been decided for intraday monitoring of existing position limits for index derivatives:
3.1. From April 01, 2025, exchanges shall monitor position limits for index derivatives intraday in line with Clause 1.3.4.1 and 1.3.4.2 of SEBI Master Circular dated December 30, 2024, as mentioned aforesaid.
3.2. However, there shall be no penalty for breach of existing position limits intraday and such intraday breaches shall not be considered as violations, until further directions.
3.3. Exchanges shall prepare a joint SOP intimating market participants regarding modalities of monitoring existing notional position limits intraday and intimate such breaches to clients / trading members for their risk monitoring.
4. This circular is being issued in exercise of powers conferred under Section 11(1) read with Section 11 (2)(a) of the SEBI Act, 1992, read with Regulation 51 of SECC Regulations, 2018, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
5. This Circular is available on SEBI website at www.sebi.gov.in under the categories“ Legal Framework” and “Circulars”.
Yours faithfully,
Ansuman Dev Pradhan
General Manager
Technology, Processing Re-Engineering and Data Analytics
Market Regulation Department
+91-22-26449622
Email: ansumanp@sebi.gov.in
