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SEBI Considers Lower F&O Margins on Non-Expiry Days

15 December 20251 min read
BANKING & FINANCESEBI ConsidersLower F&OMargins onNon-Expiry Days15 December 2025safalsetu.com

Why in the news

The market regulator looked at easing margin rules on ordinary trading days so that hedged and longer-term positions become cheaper.

Key facts

  • SPAN: risk-based system developed by CME, covering about 99.975% of risk scenarios.
  • ELM (Extreme Loss Margin): extra margin set by Indian clearing corporations on notional contract value, a guardrail against extreme volatility.
  • Present problem: trading is heavily tilted to expiry days; high non-expiry margins discourage positional and hedged trades.
  • SEBI’s goals: deepen the market and promote risk-reduced, longer-tenure positions.
Day / portfolioELM level
Non-expiry, hedgedMay fall from 2% to 0.5-1%
Non-expiry, unhedgedLikely 2%
Expiry day4% on top of SPAN

Exam angle

  • Full forms: SPAN = Standard Portfolio Analysis of Risk; ELM = Extreme Loss Margin.
  • Expiry-day structure stays at SPAN plus 4% ELM, due to higher volatility and settlement risk.

Test yourself

1. What ELM range was discussed for hedged portfolios on non-expiry days?

The notes say ELM may drop from 2% to 0.5-1% for hedged portfolios.

2. Which margin structure was to stay on expiry days in SEBI's F&O discussions?

Expiry days stay stringent because of volatility and settlement risk.

3. The SPAN margining system used in India's derivatives market was developed by which body?

The notes state SPAN was developed by CME and covers 99.975% of risk scenarios.

This topic is part of Daily Current Affairs 14 & 15 December 2025 (12 topics).

All topics of the dayDay quizDecember 2025

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