The Securities and Exchange Board of India (SEBI) has announced a series of stricter measures for derivatives trading, including tighter position limits, enhanced monitoring, and revised rules for stock positions during the ban period, effective October 1, 2025. These reforms are designed to curb excessive speculation and ensure futures and options (F&O) positions are more closely aligned with cash market activity.
Under the new rules, the Market-Wide Position Limit (MWPL) will now be tied to the cash volume and free float of each scrip. The limit will be the lower of 15% of the free float or 65 times the cash volume across exchanges. SEBI will update MWPL quarterly using rolling cash volume data, a step expected to reduce the risk of market manipulation.
During the ban period, traders’ futures equivalent (FutEq) positions will automatically reduce on an end-of-day basis. For example, if the delta position is +10 or -10 at the end of one day, it will be adjusted toward zero by the end of the next day.
Once a stock’s market-wide open interest exceeds 95% of its MWPL, brokers and traders will only be allowed to reduce positions through offsetting trades.
SEBI will also implement intraday monitoring of MWPL utilization for single stocks starting November 3, 2025, with clearing corporations performing at least four random checks during trading sessions. Any breaches may trigger additional surveillance margins.
Furthermore, starting December 6, 2025, pre-open sessions will be extended to F&O markets to enhance trading convenience and liquidity management, similar to the cash market.
These measures reflect SEBI’s push for greater market discipline, transparency, and risk management in India’s derivatives segment.