{"id":6020,"date":"2024-10-08T12:21:21","date_gmt":"2024-10-08T12:21:21","guid":{"rendered":"https:\/\/navia.co.in\/blog\/?p=6020"},"modified":"2026-08-13T09:15:15","modified_gmt":"2026-08-13T09:15:15","slug":"sebis-new-rules-for-index-derivatives","status":"publish","type":"post","link":"https:\/\/navia.co.in\/blog\/sebis-new-rules-for-index-derivatives\/","title":{"rendered":"Understanding SEBI&#8217;s New Rules for Index Derivatives: What\u2019s Changing for Traders?\u00a0"},"content":{"rendered":"<ul><li><a class=\"aioseo-toc-item\" href=\"#key-changes-in-seb-is-derivatives-regulations\">Key Changes in SEBI\u2019s Derivatives Regulations<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#1-removal-of-calendar-spread-margin-benefit-on-expiry-day\">1. Increase in Contract Size<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#2-revised-contract-size-for-index-derivatives\">2. Revised Lot Sizes<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#3-rationalization-of-weekly-expiry-products\">3. Limiting Weekly Expiry Contracts<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#4-increased-tail-risk-coverage-on-expiry-day\">4. Increased Tail Risk Coverage on Expiry Day<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#5-upfront-collection-of-options-premium\">5. Upfront Collection of Options Premium<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#6-intraday-monitoring-of-position-limits\">6. Intraday Monitoring of Position Limits<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#summary-of-key-changes\">Summary of Key Changes<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#impact-on-traders-and-examples\">Impact on Traders and Examples<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#1-reduced-leverage-for-option-buyers\">1. Reduced Leverage for Option Buyers<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#2-higher-margins-on-expiry-days\">2. Higher Margins on Expiry Days<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#3-adjusted-contract-sizes\">3. Adjusted Contract Sizes<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#4-reduced-speculative-trading-on-expiry\">4. Reduced Speculative Trading on Expiry<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#how-to-adapt-to-these-changes\">How to Adapt to These Changes<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#conclusion\">Conclusion<\/a><\/li><li><a class=\"aioseo-toc-item\" href=\"#frequently-asked-questions\">Frequently Asked Questions<\/a><\/li><\/ul>\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\">We had on 28<sup>th<\/sup> August 2024 published a Blog titled <a href=\"https:\/\/navia.co.in\/blog\/sebi-index-derivatives-framework\/?utm_source=blog&amp;utm_medium=internal_link&amp;utm_campaign=market_regulation\">\u201c<strong>SEBI\u2019s Consultation Paper on Index Derivatives Framework\u201d<\/strong><\/a><strong> <\/strong>which talked about the proposed measures SEBI is considering to restrict retail trading in Options&nbsp;<\/p><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\">On October 1, 2024, SEBI released a \u202f<a href=\"https:\/\/www.sebi.gov.in\/legal\/circulars\/oct-2024\/measures-to-strengthen-equity-index-derivatives-framework-for-increased-investor-protection-and-market-stability_87208.html\" target=\"_blank\" rel=\"noreferrer noopener\">circular<\/a> \u202fthat changes a few things for index derivatives. Here\u2019s a breakdown of all the changes and their impact. Starting November 20, 2024, SEBI will introduce several important changes for derivative traders in an effort to increase investor protection and improve market stability. If you&#8217;re a trader dealing with index derivatives like Nifty, Sensex, BankNifty, FinNifty, Bankex, MidcpNifty, NiftyNXT50 these changes will directly impact <a href=\"https:\/\/navia.co.in\/blog\/sebis-latest-guidelines-on-fo-trading\/?utm_source=blog&amp;utm_medium=internal_link&amp;utm_campaign=market_regulation\">how you trade options and futures<\/a>. In this blog, we&#8217;ll explain these updates in <strong>simple terms<\/strong>, use <strong>examples<\/strong>, and provide a summary in <strong>tabular form<\/strong> for easy understanding.&nbsp;<\/p><\/p>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:13px;line-height:1.6;color:#777\">The rules described in this article were announced by SEBI with effect from the dates stated. Please check the current framework on <a href=\"https:\/\/www.sebi.gov.in\" target=\"_blank\" rel=\"noopener\">sebi.gov.in<\/a> before trading.<\/p>\n\n\n\n<blockquote style=\"border-left:4px solid #e8622f;background:#fdf1ec;padding:18px 22px;margin:1.5em 0;line-height:1.8\"><strong>Quick Answer:<\/strong> SEBI&#8217;s circular of 1 October 2024 introduced six measures for equity index derivatives. Contract value rises to &#8377;15&#8211;20 lakh, weekly expiry is limited to one index per exchange, an extra 2% margin applies to short options on expiry day, option premium must be paid upfront, and position limits are monitored intraday.<\/blockquote>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-1\" id=\"key-changes-in-seb-is-derivatives-regulations\" style=\"color:#023368\"><strong>Key Changes in SEBI\u2019s Derivatives Regulations<\/strong>&nbsp;<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\">Based on SEBI\u2019s recent circular, the upcoming changes focus on <strong>margin requirements<\/strong>, <strong>contract sizes<\/strong>, <strong>expiry day trading<\/strong>, and more. Here\u2019s what will change:&nbsp;<\/p><\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-color has-link-color wp-elements-2\" id=\"1-removal-of-calendar-spread-margin-benefit-on-expiry-day\" style=\"color:#ec4d37\"><strong>1. Increase in Contract Size<\/strong>&nbsp;<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\">The contract value for Index F&amp;O contracts will increase from the current range of&nbsp;<strong>Rs. 5 lakhs to Rs. 10 lakhs<\/strong>&nbsp;to a new range of&nbsp;<strong>Rs. 15 lakhs to Rs. 20 lakhs<\/strong>. To align with this change, the&nbsp;<strong><a href=\"https:\/\/www.nseindia.com\/market-data\/live-equity-market\" target=\"_blank\" rel=\"noopener\">NSE<\/a><\/strong>&nbsp;and&nbsp;<strong><a href=\"https:\/\/www.bseindia.com\" target=\"_blank\" rel=\"noopener\">BSE<\/a><\/strong>&nbsp;will revise the lot sizes for all new index F&amp;O contracts introduced on the effective date 21\/11\/24.&nbsp;<\/p><\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-color has-link-color wp-elements-3\" id=\"2-revised-contract-size-for-index-derivatives\" style=\"color:#ec4d37\"><strong>2. Revised Lot Sizes<\/strong>&nbsp;<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\">The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) will revise the lot sizes for all new index F&amp;O contracts as in below from February 2025 contract expiry for Monthly contract and from January 2025 1<sup>st<\/sup> week for Weekly contracts.&nbsp;<\/p><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\"><strong>NSE Indices:<\/strong>&nbsp;<\/p><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1024\" height=\"491\" src=\"https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/download-1024x491.png\" alt=\"Index derivatives - NSE\" class=\"wp-image-7317\" style=\"max-width:100%;height:auto\" srcset=\"https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/download-1024x491.png 1024w, https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/download-300x144.png 300w, https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/download-150x72.png 150w, https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/download-768x368.png 768w, https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/download.png 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\"><strong>BSE Indices:&nbsp;<\/strong>&nbsp;<\/p><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"416\" src=\"https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/image002-1024x416.png\" alt=\"Index derivatives - BSE \" class=\"wp-image-7318\" style=\"max-width:100%;height:auto\" srcset=\"https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/image002-1024x416.png 1024w, https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/image002-300x122.png 300w, https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/image002-150x61.png 150w, https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/image002-768x312.png 768w, https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/image002.png 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading has-text-color has-link-color wp-elements-4\" id=\"3-rationalization-of-weekly-expiry-products\" style=\"color:#ec4d37\"><strong>3. Limiting Weekly Expiry Contracts<\/strong>&nbsp;<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\">As per the new rules, SEBI will restrict&nbsp;<strong>weekly expiry contracts<\/strong>&nbsp;to one benchmark index per exchange. This aims to reduce speculative trading and volatility on expiry days.&nbsp;<\/p><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"445\" src=\"https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/image003-1024x445.png\" alt=\"Weekly Expiry - Index derivatives\" class=\"wp-image-7319\" style=\"max-width:100%;height:auto\" srcset=\"https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/image003-1024x445.png 1024w, https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/image003-300x130.png 300w, https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/image003-150x65.png 150w, https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/image003-768x333.png 768w, https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/image003.png 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\" colspan=\"5\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec4d37\" class=\"has-inline-color\"><strong>Monthly Expiry Schedule<\/strong>\u00a0<strong>for Index Options and Futures<\/strong><\/mark><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Monday&nbsp;<\/strong><\/td><td><strong>Tuesday&nbsp;<\/strong><\/td><td><strong>Wednesday&nbsp;<\/strong><\/td><td><strong>Thursday&nbsp;<\/strong><\/td><td><strong>Friday&nbsp;<\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><\/td><td>SENSEX50,  BANKEX&nbsp;<\/td><td><\/td><td>Nifty50, FINNIFTY, BANKNIFTY,MIDCAPNIFTY, NIFTYNEXT50<\/td><td>&nbsp;<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><\/td><td>&nbsp;&nbsp;<\/td><td>&nbsp;&nbsp;<\/td><td>Individual Securities&nbsp;<\/td><td>&nbsp;&nbsp;<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\" colspan=\"5\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec4d37\" class=\"has-inline-color\"><strong>Weekly Expiry Schedule<\/strong><\/mark> <mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec4d37\" class=\"has-inline-color\"><strong>for Index Options<\/strong><\/mark><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Monday&nbsp;<\/strong><\/td><td><strong>Tuesday&nbsp;<\/strong><\/td><td><strong>Wednesday&nbsp;<\/strong><\/td><td><strong>Thursday&nbsp;<\/strong><\/td><td><strong>Friday&nbsp;<\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">&nbsp;&nbsp;<\/td><td>&nbsp;&nbsp;Sensex&nbsp;<\/td><td>&nbsp;&nbsp;<\/td><td>Nifty50&nbsp;<\/td><td><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading has-text-color has-link-color wp-elements-5\" id=\"4-increased-tail-risk-coverage-on-expiry-day\" style=\"color:#ec4d37\"><strong>4. Increased Tail Risk Coverage on Expiry Day<\/strong>&nbsp;<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\">To cover the risk of volatile price movements on expiry day, SEBI will require traders holding short positions to maintain an&nbsp;<strong>additional 2% Extreme Loss Margin (ELM)<\/strong>&nbsp;on&nbsp;<strong>expiry day<\/strong>. This new rule will be effective from&nbsp;<strong>November 20, 2024<\/strong>.&nbsp;&nbsp;<\/p><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\"><strong>Example Calculation:<\/strong>&nbsp;<\/p><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\">For a short position in a Nifty 25,000 call option:&nbsp;<\/p><\/p>\n\n\n\n<ul style=\"margin:1em 0;line-height:1.9\"><li style=\"margin-bottom:0.8em;line-height:1.8\"><strong>Strike Price:<\/strong>&nbsp;25,000&nbsp;<\/li><li style=\"margin-bottom:0.8em;line-height:1.8\"><strong>Lot Size:<\/strong>&nbsp;25&nbsp;<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\"><strong>2% Margin:<\/strong>&nbsp;Strike Price \u00d7 Lot Size \u00d7 2% (25,000 * 25 * 2%) = 12,500&nbsp;<\/p><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\">If the margin requirement for this position is Rs. 1 lakh, an additional margin of&nbsp;<strong>Rs. 12,500<\/strong>&nbsp;will be required on the expiry day.&nbsp;<\/p><\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-color has-link-color wp-elements-6\" id=\"5-upfront-collection-of-options-premium\" style=\"color:#ec4d37\"><strong>5. Upfront Collection of Options Premium<\/strong>&nbsp;<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\">From <strong>February 1, 2025<\/strong>, traders will need to pay the <strong>full options premium upfront<\/strong> for buying options. Previously, traders could leverage smaller upfront margins to take larger positions, especially intraday. Now, traders must pay the <strong>entire premium at the time of the trade<\/strong>, reducing the excessive leverage some traders used.&nbsp;<\/p><\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-color has-link-color wp-elements-7\" id=\"6-intraday-monitoring-of-position-limits\" style=\"color:#ec4d37\"><strong>6. Intraday Monitoring of Position Limits<\/strong>&nbsp;<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\">From <strong>April 1, 2025<\/strong>, exchanges will begin to <strong>monitor position limits intraday<\/strong> rather than just at the end of the day. This means your <strong>positions will be checked at least four times daily<\/strong> to ensure they do not exceed permissible limits.&nbsp;<\/p><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\"><strong>Example<\/strong>:&nbsp;If the limit for Nifty options is 1,000 contracts, the exchange will check your positions multiple times during the day. If your positions exceed this limit, you&#8217;ll need to bring them back within the limit or face penalties&nbsp;<\/p><\/p>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-8\" id=\"summary-of-key-changes\" style=\"color:#023368\"><strong>Summary of Key Changes<\/strong>&nbsp;<\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table><thead><tr><th class=\"has-text-align-left\" data-align=\"left\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec4d37\" class=\"has-inline-color\"><strong>Measure&nbsp;<\/strong>&nbsp;<\/mark><\/th><th><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec4d37\" class=\"has-inline-color\"><strong>Effective Date&nbsp;<\/strong>&nbsp;<\/mark><\/th><th><mark style=\"background-color:rgba(0, 0, 0, 0);color:#ec4d37\" class=\"has-inline-color\"><strong>Impact on Traders&nbsp;<\/strong>&nbsp;<\/mark><\/th><\/tr><\/thead><tbody><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Revised Contract Size for Index Derivatives<\/strong>&nbsp;&nbsp;<\/td><td>November 20, 2024&nbsp;&nbsp;<\/td><td>Contract value increased to at least \u20b915 lakhs from February 2025 expiry onwards for monthly and from January 2025 1<sup>st<\/sup> week onwards for weekly contracts&nbsp;<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong><strong>Limiting Weekly Expiry Contracts<\/strong>&nbsp;<\/strong>&nbsp;&nbsp;<\/td><td>November 20, 2024&nbsp;&nbsp;<\/td><td>Only 1 Index for weekly expiry from NSE and BSE. &nbsp;NIFTY weekly will expiry every Thursday and Sensex weekly will expire every Friday&nbsp;<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Increased Tail Risk Coverage on Expiry Day<\/strong>&nbsp;&nbsp;<\/td><td>November 20, 2024&nbsp;&nbsp;<\/td><td>Additional 2% margin required for short options on expiry day.&nbsp;&nbsp;<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Upfront Collection of Options Premium<\/strong>&nbsp;&nbsp;<\/td><td>February 1, 2025&nbsp;&nbsp;<\/td><td>Full premium required at the time of trade.&nbsp;&nbsp;<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Removal of Calendar Spread on Expiry Day<\/strong>&nbsp;&nbsp;<\/td><td>February 1, 2025&nbsp;&nbsp;<\/td><td>No margin benefit for spreads involving expiring contracts.&nbsp;&nbsp;<\/td><\/tr><tr><td class=\"has-text-align-left\" data-align=\"left\"><strong>Intraday Monitoring of Position Limits<\/strong>&nbsp;&nbsp;<\/td><td>April 1, 2025&nbsp;&nbsp;<\/td><td>Position limits will be monitored throughout the trading day.&nbsp;&nbsp;<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-9\" id=\"impact-on-traders-and-examples\" style=\"color:#023368\"><strong>Impact on Traders and Examples<\/strong>&nbsp;<\/h2>\n\n\n\n<h3 class=\"wp-block-heading has-text-color has-link-color wp-elements-10\" id=\"1-reduced-leverage-for-option-buyers\" style=\"color:#ec4d37\"><strong>1. Reduced Leverage for Option Buyers<\/strong>&nbsp;<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\">With the requirement to pay <strong>full premium upfront<\/strong>, traders will need more capital to take positions. This move limits excessive leverage and ensures better risk management.&nbsp;<\/p><\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-color has-link-color wp-elements-11\" id=\"2-higher-margins-on-expiry-days\" style=\"color:#ec4d37\"><strong>2. Higher Margins on Expiry Days<\/strong>&nbsp;<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\">On expiry days, traders will need to maintain <strong>higher margins<\/strong> as the <strong>calendar spread benefit<\/strong> is removed and additional <strong>tail risk coverage<\/strong> is introduced. This will require careful capital management to avoid margin calls.&nbsp;<\/p><\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-color has-link-color wp-elements-12\" id=\"3-adjusted-contract-sizes\" style=\"color:#ec4d37\"><strong>3. Adjusted Contract Sizes<\/strong>&nbsp;<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\">With Nifty trading at <strong>25,000<\/strong> and the contract size increasing to <strong>\u20b915 lakhs<\/strong>, the number of contracts in each lot will increase to 60 (from lower levels), making it more capital-intensive for small traders to trade index derivatives.&nbsp;<\/p><\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-color has-link-color wp-elements-13\" id=\"4-reduced-speculative-trading-on-expiry\" style=\"color:#ec4d37\"><strong>4. Reduced Speculative Trading on Expiry<\/strong>&nbsp;<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\">By offering <strong>only one weekly expiry index per exchange<\/strong>, SEBI aims to reduce speculation. With <strong>BSE choosing the Sensex (82,000)<\/strong> for weekly expiries, traders will need to adjust their strategies and focus on one index at a time.&nbsp;<\/p><\/p>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-14\" id=\"how-to-adapt-to-these-changes\" style=\"color:#023368\"><strong>How to Adapt to These Changes<\/strong>&nbsp;<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\"><strong>To stay ahead of these new rules, traders should:&nbsp;<\/strong><\/p><\/p>\n\n\n\n<ul style=\"margin:1em 0;line-height:1.9\"><li style=\"margin-bottom:0.8em;line-height:1.8\">Plan ahead for expiry days, ensuring sufficient capital to cover increased margins.&nbsp;<\/li><li style=\"margin-bottom:0.8em;line-height:1.8\">Monitor <strong>position limits<\/strong> throughout the trading day to avoid penalties.&nbsp;<\/li><li style=\"margin-bottom:0.8em;line-height:1.8\">Adjust to the new <strong>contract sizes<\/strong> by trading more strategically or reducing position sizes.&nbsp;<\/li><li style=\"margin-bottom:0.8em;line-height:1.8\">Focus on <strong>Nifty weekly options on NSE<\/strong> and <strong>Sensex weekly options on BSE<\/strong> for expiration trades.&nbsp;<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading has-text-color has-link-color wp-elements-15\" id=\"conclusion\" style=\"color:#023368\"><strong>Conclusion<\/strong>&nbsp;<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\">SEBI\u2019s new regulations aim to make the index derivatives market <strong>safer and more stable<\/strong> by addressing excessive leverage, tightening margins, and reducing speculative volatility on expiry days. Traders will need to be more strategic in managing their positions, ensuring they have enough capital to meet the new margin requirements, and carefully selecting the right contracts.&nbsp;<\/p><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><a href=\"https:\/\/open.navia.co.in\/index-navia.php?utm_source=Organic&amp;utm_medium=blog&amp;utm_campaign=blog&amp;utm_content=indexderivatives_CTA\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"149\" src=\"https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/08\/Open-Free-Demat-Account-2-1024x149.png\" alt=\"Index derivatives \" class=\"wp-image-4299\" style=\"max-width:100%;height:auto\" srcset=\"https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/08\/Open-Free-Demat-Account-2-1024x149.png 1024w, https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/08\/Open-Free-Demat-Account-2-300x44.png 300w, https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/08\/Open-Free-Demat-Account-2-150x22.png 150w, https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/08\/Open-Free-Demat-Account-2-768x112.png 768w, https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/08\/Open-Free-Demat-Account-2.png 1028w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/a><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\">With the changes coming into effect from <strong>November 20, 2024<\/strong>, now is the time to start adjusting your strategies and preparing for the new trading landscape.&nbsp;<\/p><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><p style=\"line-height:1.8;text-align:justify\">By staying informed and adapting to these new rules, traders can continue to participate effectively in the derivatives market while navigating the tighter regulations.&nbsp;<\/p><\/p>\n\n\n\n<h3 style=\"color:#ec4d37\">Key Takeaways<\/h3>\n<ul style=\"margin:1em 0;line-height:1.9\"><li style=\"margin-bottom:0.8em;line-height:1.8\">The measures come from a SEBI circular dated 1 October 2024, and the article states effective dates of 20 November 2024, 1 February 2025 and 1 April 2025 for different items.<\/li><li style=\"margin-bottom:0.8em;line-height:1.8\">Index F&amp;O contract value moves from a range of &#8377;5&#8211;10 lakh to a range of &#8377;15&#8211;20 lakh, with NSE and BSE revising lot sizes from the February 2025 monthly expiry and the first week of January 2025 for weekly contracts.<\/li><li style=\"margin-bottom:0.8em;line-height:1.8\">Weekly expiry contracts are limited to one benchmark index per exchange &#8212; Nifty 50 on NSE and Sensex on BSE.<\/li><li style=\"margin-bottom:0.8em;line-height:1.8\">Short positions on expiry day attract an additional 2% Extreme Loss Margin; on a Nifty 25,000 call with a lot size of 25 that is 25,000 &#215; 25 &#215; 2% = &#8377;12,500 of extra margin.<\/li><li style=\"margin-bottom:0.8em;line-height:1.8\">Full option premium must be collected upfront from 1 February 2025, and exchanges monitor position limits at least four times a day from 1 April 2025.<\/li><li style=\"margin-bottom:0.8em;line-height:1.8\">This article was written before those effective dates and describes the measures as forthcoming; check the SEBI circular for the position in force today.<\/li><\/ul>\n\n\n\n<p class=\"has-text-align-center wp-block-paragraph\"><strong>DID YOU FIND THIS INTERESTING?<\/strong><\/p>\n\n\n\n<div class=\"wp-block-group is-nowrap is-layout-flex wp-container-core-group-is-layout-8f761849 wp-block-group-is-layout-flex\">\n<p class=\"wp-block-paragraph\"><strong>We&#8217;d love to hear from you &#8211;<\/strong> <\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><a href=\"https:\/\/form.typeform.com\/to\/bpQ8ZlDc?typeform-source=navia.co.in\"><img loading=\"lazy\" decoding=\"async\" width=\"300\" height=\"64\" src=\"https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2025\/01\/Yes-No-Button.png\" alt=\"yes or no feedback form\" class=\"wp-image-8335\" style=\"max-width:100%;height:auto\" srcset=\"https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2025\/01\/Yes-No-Button.png 300w, https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2025\/01\/Yes-No-Button-150x32.png 150w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/><\/a><\/figure>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"frequently-asked-questions\" style=\"color:#023368\">Frequently Asked Questions<\/h2>\n\n\n\n<details class=\"wp-block-details is-layout-flow wp-block-details-is-layout-flow\" style=\"background:#f1f1f1;border-radius:4px;margin-bottom:10px\">\n<summary style=\"font-weight:600;font-size:17px;color:#1a2332;cursor:pointer;padding:16px 20px\">What did SEBI change for index derivatives in its October 2024 circular?<\/summary>\n\n<p class=\"wp-block-paragraph\" style=\"padding:0 20px 18px 20px;line-height:1.8;color:#333;margin:0\">The circular, released on 1 October 2024, covers six measures: an increase in contract size, revised lot sizes, limiting weekly expiry contracts to one index per exchange, an additional 2% tail risk margin on expiry day, upfront collection of option premium, and intraday monitoring of position limits.<\/p>\n\n<\/details>\n\n\n\n<details class=\"wp-block-details is-layout-flow wp-block-details-is-layout-flow\" style=\"background:#f1f1f1;border-radius:4px;margin-bottom:10px\">\n<summary style=\"font-weight:600;font-size:17px;color:#1a2332;cursor:pointer;padding:16px 20px\">What is the new contract size for index derivatives?<\/summary>\n\n<p class=\"wp-block-paragraph\" style=\"padding:0 20px 18px 20px;line-height:1.8;color:#333;margin:0\">The contract value for index F&amp;O contracts increases from the earlier range of &#8377;5 lakhs to &#8377;10 lakhs to a new range of &#8377;15 lakhs to &#8377;20 lakhs. NSE and BSE revise lot sizes for all new index F&amp;O contracts from the February 2025 expiry for monthly contracts and the first week of January 2025 for weekly contracts.<\/p>\n\n<\/details>\n\n\n\n<details class=\"wp-block-details is-layout-flow wp-block-details-is-layout-flow\" style=\"background:#f1f1f1;border-radius:4px;margin-bottom:10px\">\n<summary style=\"font-weight:600;font-size:17px;color:#1a2332;cursor:pointer;padding:16px 20px\">Which indices still have weekly expiry?<\/summary>\n\n<p class=\"wp-block-paragraph\" style=\"padding:0 20px 18px 20px;line-height:1.8;color:#333;margin:0\">Weekly expiry contracts are restricted to one benchmark index per exchange. The article states that Nifty weekly contracts expire every Thursday on NSE and Sensex weekly contracts expire every Friday on BSE.<\/p>\n\n<\/details>\n\n\n\n<details class=\"wp-block-details is-layout-flow wp-block-details-is-layout-flow\" style=\"background:#f1f1f1;border-radius:4px;margin-bottom:10px\">\n<summary style=\"font-weight:600;font-size:17px;color:#1a2332;cursor:pointer;padding:16px 20px\">How much extra margin applies to short options on expiry day?<\/summary>\n\n<p class=\"wp-block-paragraph\" style=\"padding:0 20px 18px 20px;line-height:1.8;color:#333;margin:0\">An additional 2% Extreme Loss Margin is required on expiry day for traders holding short positions. The article&#8217;s example uses a short Nifty 25,000 call with a lot size of 25: 25,000 &#215; 25 &#215; 2% = &#8377;12,500, so a position with a &#8377;1 lakh margin requirement needs &#8377;12,500 more on expiry day.<\/p>\n\n<\/details>\n\n\n\n<details class=\"wp-block-details is-layout-flow wp-block-details-is-layout-flow\" style=\"background:#f1f1f1;border-radius:4px;margin-bottom:10px\">\n<summary style=\"font-weight:600;font-size:17px;color:#1a2332;cursor:pointer;padding:16px 20px\">What does upfront collection of option premium mean for buyers?<\/summary>\n\n<p class=\"wp-block-paragraph\" style=\"padding:0 20px 18px 20px;line-height:1.8;color:#333;margin:0\">From 1 February 2025 traders must pay the entire option premium at the time of the trade. Previously smaller upfront margins could be used to take larger positions, especially intraday, so the change reduces the leverage available to option buyers and means more capital is needed per position.<\/p>\n\n<\/details>\n\n\n\n<details class=\"wp-block-details is-layout-flow wp-block-details-is-layout-flow\" style=\"background:#f1f1f1;border-radius:4px;margin-bottom:10px\">\n<summary style=\"font-weight:600;font-size:17px;color:#1a2332;cursor:pointer;padding:16px 20px\">Are these index derivatives rules in force now?<\/summary>\n\n<p class=\"wp-block-paragraph\" style=\"padding:0 20px 18px 20px;line-height:1.8;color:#333;margin:0\">The article was published before the dates it cites and describes the measures as forthcoming. Its own stated effective dates are 20 November 2024, 1 February 2025 and 1 April 2025, all of which have passed. Refer to the linked SEBI circular for the position in force today.<\/p>\n\n<\/details>\n\n\n\n<p class=\"wp-block-paragraph\" style=\"font-size:13px;line-height:1.6;color:#777\"><strong>DISCLAIMER: Investments in the securities market are subject to market risks, read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Brokerage will not exceed the SEBI prescribed limit<\/strong>. Full disclaimer: <a href=\"https:\/\/bit.ly\/naviadisclaimer\" target=\"_blank\" rel=\"noopener\">https:\/\/bit.ly\/naviadisclaimer<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>We had on 28th August 2024 published a Blog titled \u201cSEBI\u2019s Consultation Paper on Index Derivatives Framework\u201d which talked about the proposed measures SEBI is considering to restrict retail trading in Options&nbsp; On October 1, 2024, SEBI released a \u202fcircular \u202fthat changes a few things for index derivatives. Here\u2019s a breakdown of all the changes [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":6041,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ub_ctt_via":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[5],"tags":[327,328,275,27,8],"class_list":["post-6020","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-insights","tag-derivatives-market","tag-derivatives-trading","tag-index-derivatives","tag-options-trading","tag-sebi"],"aioseo_notices":[],"featured_image_src":"https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/SEBI-new-Rule.png","author_info":{"display_name":"Navia Markets","author_link":"https:\/\/navia.co.in\/blog\/author\/tradeplusonline\/"},"jetpack_featured_media_url":"https:\/\/navia.co.in\/blog\/wp-content\/uploads\/2024\/10\/SEBI-new-Rule.png","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/posts\/6020","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/comments?post=6020"}],"version-history":[{"count":17,"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/posts\/6020\/revisions"}],"predecessor-version":[{"id":19243,"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/posts\/6020\/revisions\/19243"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/media\/6041"}],"wp:attachment":[{"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/media?parent=6020"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/categories?post=6020"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/navia.co.in\/blog\/wp-json\/wp\/v2\/tags?post=6020"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}