How will the new intraday limits of Sebi influence the derivatives of the stock index?

Mumbai: the Securities and Exchange Board of India (Sebi) has tightened the Intraday position limits in the derivatives of shares index, revived an earlier plan to check whether the wants to inflict hyphensated bets on for -off days, and the volatility of market manipulation.

Under the new framework that starts on 1 October, every trade entity can take a maximum intraday net futures equivalent position of £ 5,000 crore in index options compared to the existing end of the day of £ 1500 crore. This means that traders should not exceed the CRORE position limit of £ 5,000 and should reduce it at the end of £ 1500. Until now there has been no intraday ceiling. The Intraday Gross Futures Equivalent limit is set at £ 10,000 crore on both long and short sides in line with existing gross timitia at the end of the day.

In a circular of 1 September, Sebi said that it has been observed of large Intraday positions created by certain entities in index options on the due date of the contract day and the risks for market integrity. The supervisor has been careful for major players such as foreign hedge funds, large trading companies and their own agencies with superior technology.

Intraday monitoring
Sebi is careful with the fact that these players have inappropriate influence on the derivatives market, in particular on fake days. The concern has been increased by recent episodes such as the Handelsbureau Jane Street, which is said to manipulate the local derivatives market, which has led to a temporary ban on it.

Intraday monitoring helps Sebi to keep large, concentrated bets in index options, especially on fake days when volatility tends to spijken. “These revised standards are expected to significantly curb excessive volatility in the short term and reduce the risk of market manipulation, increase protection for retail investors,” said Vipin Kumar, assistant vice-president of derivatives and technical research on Globe Capital Market.

Under the monitoring system, stock fairs will check exposures using at least four random Intraday snapshots in a trade session, including one between 14:45 and 15:30 to record raised activities on the due date.

For entities that break the boundaries, the supervisor said that “stock markets should investigate trading patterns of such entities, including the search for reason for such positions of customers and investigating trade in the voters of the index by the entity and discussing such authorities with Sebi in the Surveillance meeting”.