New SEBI Regulations on Intraday Trading

The Securities and Exchange Board of India (SEBI) has implemented revised regulations on Intraday trading, with effect from November 20, 2024. These regulations are meant to lessen risks and prevent speculative trading practices.

Increased Contract Sizes

The new SEBI regulations stipulated a contract size of index derivatives of INR 15 lakh, rising from INR 5-10 lakh. The maximum contract value is INR 20 lakh. This will help secure small traders and minimize speculative practices.

Weekly Expiry Limitations

The market regulator has announced a massive decrease in weekly expiry contracts. These contracts would be there on one benchmark index for each exchange. Only the Sensex and Nifty indices will have contracts that expire in a week.

Upfront Premium Collection

Since February 1, 2025, brokers have been directed to collect the full option premiums in advance. It will ensure traders wont use too much leverage and have sufficient collateral or money for their positions.

Intraday Monitoring

Since April 1, 2025, exchanges will check intraday position limits for index derivatives so that traders adhere to the allowed limits. The adherence will be ensured as exchanges will assess traders position several times across the trading day.

No Calendar Spread Benefits

SEBI has revoked the calendar spread benefits. As a result, traders will not be required to create offsetting positions across different expiries on the expiry day. This rule is on from February 1, 2025.

Additional Margins on Expiry Days

With effect from November 20, 2024, an Extreme Loss Margin (ELM) of 2% will apply to short positions for options on expiry days. The move helps shield traders against market volatility.

Conclusion

Take note of these intraday trading changes so that you can benefit and prevent yourself from unnecessary losses that speculative practices lead to. Keep watching our space for more exciting market updates.