SEBI New Rules: SEBI’s New Regulations for Intraday Traders, Effective from October 1
SEBI New Rules: New regulations for intraday traders from SEBI are coming into effect from October 1. These new rules are set to bring a significant change to trading in the derivatives segment of the Indian stock market. The Securities and Exchange Board of India (SEBI) has taken this step to reduce excessive risk and volatility in intraday trading. Let’s explore in detail what these new rules are and how they will impact investors.
What are the New Regulations?
SEBI’s new rules are primarily focused on imposing position limits for trading in equity index derivatives. The main objective is to prevent the sudden volatility created in the market by large trading firms, especially on option expiry days.
The key changes are:
- Net Intraday Position Limit: From now on, any single trading entity can hold a maximum net position of ₹5,000 crore during intraday trading. This is a significant regulatory measure.
- Gross Intraday Position Limit: The gross position limit for firms has been set at ₹10,000 crore. This rule will apply separately to both long and short positions.
- Strict Monitoring: To ensure these rules are followed correctly, stock exchanges will have to take a more active role. Position limits will be monitored by taking at least four random snapshots during trading hours. One of these snapshots is mandatory between 2:45 PM and 3:30 PM, as trading pressure is typically highest during this time.
What Will Be the Impact on Investors?
These new regulations are important for both retail and institutional investors.
- For Retail Investors: This is a positive development for small investors. The sudden market fluctuations caused by massive trades from large firms will now be reduced. This will lead to a more stable market and protect retail investors from unexpected losses.
- For Institutional Investors: Large trading firms and institutional investors may now need to adjust their trading strategies. They will have to operate within the position limits, making it more difficult for them to make huge speculative bets or influence the market.
- Market Stability: Overall, these rules are expected to improve the health of the market. The volatility, especially seen on expiry days, will be brought under control, fostering a healthier environment for long-term investment.
Penalty for Violations
If any trading firm violates these prescribed limits, the stock exchange will investigate their trading patterns and report to SEBI if necessary. Penalties or additional surveillance deposits may be imposed for such violations. Punitive measures for violations on expiry days will be even stricter, coming into effect from December 6, 2025.
In summary, this new initiative by SEBI is an effort to make the Indian stock market more secure and transparent. It aims to boost investor confidence and create a more stable trading environment.
