SEBI has introduced a new rule on September 1, 2025, to regulate intraday trading more effectively. The primary aim is to make the Indian stock market safer and more stable. In recent years, the rapid increase in index options and futures activity has posed several challenges for SEBI. In response, SEBI has announced changes that will impact both exchanges and investors.
Let’s understand what this new rule is and what it means for investors and traders.
What’s Happening?
In February 2025, SEBI had presented a framework for intraday and end-of-day position limits in its consultation paper. This was further detailed in a circular in May 2025. At that time, the end-of-day limit was set at Rs 1,500 crore for net positions and Rs 10,000 crore for gross positions, while there was no clear limit for intraday positions. Exchanges were monitored only through random snapshots.
However, SEBI found that many investors and institutions, especially on contract expiry days, were taking very large intraday positions. This was causing unusual market fluctuations and increasing risks to ‘market integrity’. To address this, SEBI has now introduced a stricter and clearer framework to control intraday activities and ensure transparency.
Latest Rules and Limits by SEBI
According to the new circular, the intraday net position limit for each entity has been set at Rs 5,000 crore, while the gross position limit remains at Rs 10,000 crore. This gross limit will apply separately to both long and short positions.
To strengthen monitoring, exchanges must take position snapshots at least four times a day. One of these snapshots is mandatory between 2:45 PM and 3:30 PM, when market activity is usually at its peak. During these snapshots, exchanges will assess positions based on the prevailing underlying prices.
Provision for Violation and Penalty
Investors will be allowed to take additional exposure only if they provide adequate coverage in the form of securities or cash. If any entity violates these prescribed limits, the stock exchanges will review their trading patterns, seek explanations from clients, and, if required, take further action in coordination with SEBI. Breaching the limits on expiry days will attract additional penalties and an ‘Additional Surveillance Deposit’.
The latest norms will come into effect from October 1, 2025, while the penalty and surveillance deposit related to contract expiry will be effective from December 6, 2025.
What Does It Mean for Investors?
The new rule sends different signals to different investors. Retail traders, who often place large intraday orders with limited capital on expiry days, will find the rule a sign of stricter regulation. They will now have to operate within the prescribed limits, and taking additional exposure will require higher margins. This may increase their trading costs, but risk management will improve.
For institutional investors and long-term participants, the move can be seen as positive. With reduced volatility, price discovery will be more stable, and sudden fluctuations can be avoided. This framework will also give confidence to liquidity providers and market makers that trading will remain organised and balanced.
Overall, the system will discourage short-term speculation among small investors and encourage a more disciplined and strategic approach.
What’s Next?
To implement this rule effectively, stock exchanges and clearing corporations must jointly create a Standard Operating Procedure (SOP) and submit it to SEBI within 15 days of the circular’s issuance. They must also make it available to all market participants. Additionally, these institutions will need to develop the necessary systems and monitoring mechanisms to enforce the rule.
This move indicates that SEBI has understood the realities of the market and framed regulations accordingly. It could be a significant step towards creating a safer and more stable market.
*The article is for information purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
