Sebi Tightens Risk Monitoring in Equity Derivatives

The Securities and Exchange Board of India (Sebi) has unveiled a series of stringent measures aimed at bolstering risk monitoring in the equity derivatives market. This move, announced on Thursday, is designed to include the intraday monitoring of market-wide positions on single stock derivatives.

The newly implemented provisions require exchanges to conduct a minimum of four random intraday checks on Market-Wide Position Limit (MWPL) utilisation throughout the trading day. According to Sebi, exchanges are also tasked with setting new eligibility criteria for derivatives on non-benchmark indices and revising individual entity-level position limits based on updated MWPL frameworks.

These steps are slated for a phased implementation beginning on October 1. They are crucial for ensuring the integrity of the securities market ecosystem amid significant market changes, such as increased retail participation and the offering of short tenure index options contracts, which have influenced trading volumes on expiry days.

(With inputs from agencies.)