Executive Summary:
This SEBI circular addresses intraday monitoring of position limits for index derivatives. While exchanges will monitor these limits from April 1, 2025, as per the SEBI Master Circular of December 30, 2024, no penalties will be levied for intraday breaches initially. Exchanges must develop a joint Standard Operating Procedure (SOP) to inform market participants about the intraday monitoring process.
Key Points / Main Content:
Intraday Monitoring:
* From April 1, 2025, stock exchanges will monitor position limits for index derivatives intraday, using a minimum of four random snapshots during the day.
* The methodology will follow Clause 1.3.4.1 and 1.3.4.2 of the SEBI Master Circular dated December 30, 2024.
Penalty and Violation:
* There will be no penalty for breaching existing position limits intraday.
* Intraday breaches will not be considered violations until further notice.
Standard Operating Procedure (SOP):
* Exchanges must create a joint SOP detailing the process for monitoring existing notional position limits intraday.
* Breaches must be communicated to clients/trading members for risk monitoring purposes.
Impact Analysis:
Stock Exchanges:
* Impact: Stock exchanges are required to implement intraday monitoring of position limits, develop an SOP, and communicate breaches to relevant parties.
* Action Required: Implement intraday monitoring by April 1, 2025, create a joint SOP, and inform market participants about the intraday monitoring process.
Clearing Corporations (Except Commodity Derivatives Exchanges and Clearing Corporations):
* Impact: These entities need to be aware of the new monitoring guidelines and potentially adjust their systems accordingly.
* Action Required: Review and understand the circular and any related SOP issued by the stock exchanges.
Market Participants (Stock Brokers and Clients):
* Impact: Market participants will have their positions monitored intraday and will receive notifications of breaches.
* Action Required: Monitor communications from exchanges regarding the SOP and adjust risk management practices accordingly.
SEBI:
* Impact: Responsible for overseeing the implementation and effectiveness of the intraday monitoring process.
* Action Required: Monitor the implementation of the circular and provide further directions as needed.
Key Entities Referenced
SEBI: Securities and Exchange Board of India, the regulatory body for securities markets in India.
Stock Exchanges: All stock exchanges regulated by SEBI.
Clearing Corporations: All clearing corporations except Commodity Derivatives Exchanges and Clearing Corporations.
Index Derivatives: Equity index derivative contracts.
SEBI Master Circular dated December 30, 2024: A circular issued by SEBI regarding regulations for Stock Exchanges and Clearing Corporations which stipulates Intraday Monitoring of Position Limits for Index Derivatives.
ANMI: Association of National Exchanges Members of India, an industry association.
BBF: An industry association (full form not provided in the text).
CPAI: An industry association (full form not provided in the text).
CIRCULAR
SEBI/HO/MRD/TPD-1/P/CIR/2025/41 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
Page 1 of 2consultation 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
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