SEBI notifies new F&O rules with enhanced Index Position Limit, new way of measuring risk

The Securities and Exchange Board of India (SEBI) has introduced significant amendments to the Futures and Options (F&O) trading framework, notably increasing the Index Options position limit from the previously proposed Rs 1,500 crore to a substantial Rs 10,000 crore. This change aims to provide more flexibility and capacity for market participants, particularly institutional investors, thereby potentially boosting market liquidity and stability. In addition to the enhanced position limits, SEBI has implemented a novel approach to measuring risk in the derivatives market. This new methodology is expected to offer a more comprehensive assessment of market volatility and participant exposure, ensuring a more robust risk management framework. By refining these metrics, SEBI seeks to align India's financial markets with global standards, promoting investor confidence and market integrity. These updates are part of SEBI's broader strategy to modernize the regulatory landscape, supporting a dynamic and resilient trading environment. Market participants have welcomed the changes, anticipating that the increased limits and improved risk assessment will encourage greater participation and innovation in the derivatives segment. As these measures take effect, SEBI continues to monitor their impact closely, ensuring the sustained growth and competitiveness of India's financial markets.

— Authored by Next24 Live