SEBI has introduced several key measures that will significantly impact the equity derivatives market. These changes are designed to enhance investor protection, ensure market stability, and align the derivatives framework with evolving market dynamics. Below are the details of the new regulations:

1. Increased Lot Sizes for Index Derivatives

• Effective November 20, 2024, the contract value for index derivatives will increase to ₹15–20 lakhs from the current range of ₹5–10 lakhs.
• NSE and BSE will revise lot sizes accordingly for all new index derivative contracts introduced after this date. For more details, refer to this notice.

2. Discontinuation of Weekly Expiry for Multiple Indices

• Starting November 20, 2024, exchanges will offer weekly expiry contracts for only one benchmark index.
• Weekly expiries for other indices will be discontinued to reduce speculative trading and promote stability. For more details, refer to this notice.

3. Removal of Calendar Spread Benefits on Expiry Day

• From February 10, 2025, margin benefits for calendar spreads will no longer apply on expiry day for contracts expiring that day.
• For example, a hedged position involving a short option with a margin of ₹1,00,000 expiring on 31st January and a long option expiring on 28th February will lose its margin benefit of ₹50,000 on 31st January. Traders must maintain the full ₹1,00,000 margin.

4. Introduction of Extreme Loss Margin (ELM) on Expiry Day

• Effective November 20, 2024, a 2% ELM will be levied on all short options contracts on expiry day to cover heightened risks.
• For example, a Nifty 25,000 call option with a margin of ₹1,00,000 will require an additional ₹12,500 (25,000 * 25 lot size * 2%) on expiry day.

5. Upfront Collection of Option Premiums

• Starting February 1, 2025, SEBI mandates upfront collection of the entire option premium from buyers to eliminate undue leverage.
• No Changes for FYERS customers, as we already comply with this requirement.

6. Intraday Monitoring of Position Limits

• From April 1, 2025, exchanges will monitor position limits multiple times during the trading day to ensure compliance.
• At least four intraday snapshots will be taken at random intervals to check for breaches of permissible position limits.

For more details, kindly refer to this circular.

(Updated on 1st November)