SEBI normalizes intraday monitoring rules amid facing opposition

Amid facing industry opposition, the Securities and Exchange Board of India has relaxed the intraday monitoring regulations for index derivatives, which are scheduled to take effect from April 1. Any violations of current limitations would not draw penalties—for now, as per the circular published on Friday in response to industry stakeholders' concerns.

From the next week, exchanges as the NSE and BSE will daily capture at least four random position snapshots inside specified time frames. Though it has generated controversy among traders and brokers, the action seeks to improve control of the derivatives market.

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Industry groups such as the Association of National Exchanges Members of India, Brokers Forum, and Commodity Participants Association of India raised possible issues. They contended that consumers and stockbrokers lack the tools to track current notional-based position limitations intraday.

While complicating matters, Sebi’s consultation document published on February 24 suggests a move to delta-based or futures-equivalent limitations, with greater intraday thresholds than end-of-day (EOD) caps a framework that might make present preparations irrelevant once finalised.

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With this conclusion, Sebi has came out with a easier norms, under which exchanges will monitor intraday limits and notify clients and trading members of breaches for risk management purposes, but no fines or violations will be recorded until further guidance is issued.  

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