A committee formed by the capital markets regulator has considered introducing an intraday net exposure limit of ₹1,500 crore on the expiry day of weekly options like Nifty and Sensex to curb excessive positions and trading frenzy, according to sources. The Secondary Market Advisory Committee (SMAC) discussed this following the Securities and Exchange Board of India’s (Sebi) action against US-based hedge fund Jane Street for alleged manipulation in Bank Nifty and Nifty options, causing losses mainly to retail investors. Jane Street has deposited ₹4,844 crore in escrow while Sebi investigates.
Currently, Sebi enforces a ₹1,500 crore end-of-day net exposure limit and a ₹10,000 crore gross limit but has no intraday net limit. On expiry days, traders often exceed these caps as contracts expire by market close, making limits ineffective. The proposal aims to prevent this expiry-day volatility. Penalties for routinely breaching intraday limits were also discussed, which currently don’t exist, unlike graded penalties for end-of-day violations.
Experts say the move will mostly affect large traders, with minimal impact on retail investors, though it may reduce liquidity and widen bid-ask spreads. Sebi’s final decision will depend on how the framework is structured.
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