By Nesil Staney
The vast changes introduced by the Securities and Exchange Board of India (SEBI) in the derivatives market offer a fresh breathing room for traders. Real-time data and fewer security bans are welcome measures, said traders, brokers and other market participants.
“The measures are widely seen as a proactive step to foster a safer, more resilient and investor-friendly derivatives markets in India,” said Naman Shah, senior vice president, Ohm Dovetail, a clearing member.
SEBI aims to sharpen risk measurement and stabilise the booming derivatives market. The new measures include complex delta-based open interest (OI) system, revamped market-wide position limits (MWPL) and new position limits for index derivatives.
The regulator is now employing a future equivalent (FutEq) method to measure open interest, replacing the notional method.
“Standardising expiry days and tightening rules around large positions will reduce volatility and protect retail investors. By allowing higher gross exposure while maintaining net limits, the circular balances flexibility for institutions while containing systemic risks,” Shah said.
Delta-based OI weights positions on their actual price sensitivity. It aligns India with global peers like the US, EU and South Korea, which use delta in risk frameworks.
“The calculation of OI by future equivalent method will make it more difficult for entities to manipulate securities in ban period,” said Chandan Taparia, head derivatives, wealth management at Motilal Oswal Financial Services.
MWPL, set at 20% of a listed company’s free-float market capitalisation, caps total OI in a stock’s F&O contracts to curb wild speculations.
Position limits for index futures and options have been enhanced, with net and gross end-of-day FutEq OI limits for options being set at Rs 1,500 crore and Rs 10,000 crore, respectively. For futures, limits will be specific to the categories, with those being either 15% of futures OI or Rs 500 crore (whichever is higher) for Category I FPIs and other institutional participants. For other FPIs, such as individuals, family offices and corporates, the limit is 5% of futures OI or Rs 500 crore.
Brokers will be able to offer more contracts to their clients without hitting position limits due to increase in client-wise position limit, said Taparia. “Pre- and post-open sessions will help in better price discovery for clients.”
Apart from brokers and clearing houses, investors and traders are also upbeat about new measures.
“For India’s growing retail traders, it means fairer markets — less manipulation, clearer signals, and better protection,” said Shashank Dube, an investor and macro insights expert.
There are also some worries, he said. “Fixed expiry days stabilise but disrupt strategies; relaxed index monitoring aids market makers, yet tighter checks, FutEq OI transition worry traders.”
Other market participants such as advisory businesses are hopeful that new measures will lead to a more structured and safe market.
“These changes may raise the bar for participation. It will also improve long-term confidence, especially for serious investors looking for predictable trading environment,” said Harish Sharma, associate director at Sanctum Wealth.