India's Securities Regulator Increases Position Limits with New Delta-Based Calculation

India's securities regulator, Sebi, has recommended higher-than-expected position limits and a new method for calculating the value of options and futures outstanding. The proposed changes aim to better align risk with investors' market exposure and prevent manipulation in the world's largest derivatives market. The final rules will be codified after the regulator issues a notification. The changes come after Sebi introduced curbs to halt rampant speculation in the market.

India's securities regulator, the Securities and Exchange Board of India (Sebi), has proposed significant changes to position limits and the calculation method for options and futures outstanding. These changes aim to better align risk with investors' market exposure and prevent manipulation in the world's largest derivatives market. The final rules will be codified after the regulator issues a notification.

The proposed changes include higher-than-expected position limits and a new method for calculating the value of outstanding options and futures. Sebi introduced these curbs to halt rampant speculation and stabilize the market. The new rules are expected to enhance transparency and fairness in the derivatives market.

Sebi's proposal follows its recent efforts to regulate the market more effectively. The regulator has been working to address concerns over speculative trading and market manipulation. By implementing these changes, Sebi seeks to create a more balanced and stable market environment.

The proposed position limits and calculation method are part of Sebi's broader strategy to modernize and strengthen India's financial markets. These changes are expected to benefit investors by reducing the risk of market manipulation and enhancing the overall integrity of the market.

The final rules will be subject to public consultation and review before being implemented. Sebi has invited stakeholders, including market participants and industry experts, to provide their feedback on the proposed changes. The regulator is committed to ensuring that the changes are fair, transparent, and effective in achieving their intended goals.

Sebi's proposal is a significant step towards modernizing India's derivatives market. By implementing these changes, the regulator aims to create a more robust and resilient market that can better serve the needs of investors and the broader economy.

References:
[1] https://www.business-standard.com/markets/news/nse-gets-sebi-nod-to-launch-electricity-derivatives-at-nascent-stage-125050701634_1.html
[2] https://www.morningstar.com/news/pr-newswire/20250508ny83063/canopy-growth-corporation-sued-for-securities-law-violations-investors-should-contact-the-gross-law-firm-before-june-3-2025-to-discuss-your-rights-cgc