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SEBI’s New Risk-Based Rules for Equity Derivatives

30 May 20251 min read
BANKING & FINANCESEBI’s NewRisk-Based Rulesfor EquityDerivatives30 May 2025safalsetu.com

Why in the news

SEBI’s circular overhauls equity derivatives rules to curb speculation and align risk with cash market activity.

Key changes

  • Futures Equivalent Open Interest uses each contract’s delta, replacing notional value.
  • MWPL for single-stock F&O depends on delivery volume, stopping inflation by far out-of-the-money options.
  • In the F&O ban period, trades must reduce exposure by day end, or clearing corporations penalise.
  • Passive breaches are not penalised.
Index productLimit per entity (from 1 July 2025)
Options, net₹1,500 crore
Options, gross₹10,000 crore
FuturesBy participant type

Pre-open session

  • Includes current-month futures, and next-month contracts in the final five trading days before expiry, for smooth rollover.
  • Most provisions start 1 July 2025.

Exam angle

  • Terms: MWPL, delta, F&O ban.

Test yourself

1. SEBI's new method for computing open interest in equity derivatives is based on which measure?

Futures Equivalent Open Interest uses the delta of each option or future.

2. What is the net-basis cap on index options per entity under SEBI's new limits effective 1 July 2025?

Index options have a ₹1,500 crore net cap and ₹10,000 crore gross cap per entity.

3. Under SEBI's revised rules, single-stock MWPL is linked to which factor?

MWPL for single-stock F&O is tied to cash market delivery volume.

This topic is part of Daily Current Affairs 30 May 2025 (13 topics).

All topics of the dayDay quizMay 2025

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