The Securities and Exchange Board of India (SEBI) announced on Friday that stock exchanges will begin monitoring at least four position limits for index derivatives during intraday trading from April 1, 2025.
However, SEBI clarified that there will be no penalty for breaching the current position limits.
Additionally, SEBI has directed the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) to jointly develop a Standard Operating Procedure (SOP) to inform traders about the process of monitoring notional position limits during intraday trading.
Exchanges must also notify their customers and trading members about any violations for risk management purposes.
Guidelines for Intraday Position Monitoring
In a circular dated December 30, 2024, SEBI instructed stock exchanges and clearing corporations to implement intraday position monitoring in addition to the existing ‘End of Day’ mechanism.
According to the circular, equity index derivative contract position limits will be monitored throughout the trading day starting from April 1, 2025.
To achieve this, SEBI has mandated that stock exchanges capture at least four position snapshots throughout the day. While exchanges have the flexibility to decide the exact number of snapshots, they must ensure a minimum of four per day.
Penalty Framework for Violations
The position snapshots will be taken randomly during predetermined time intervals. The December 2024 circular had also introduced a penalty structure for violations.
The same penalty framework used for end-of-day position limit breaches will now be applied to intraday position limit violations as well.
