Sebi Proposes Revamp in Equity Derivatives Monitoring

Sebi proposes measures to enhance risk monitoring and trading efficiency in the equity derivatives market. This includes real-time monitoring of F&O Open Interest, updated exposure calculations, and new position limits. Public comments are invited until March 17 to ensure a comprehensive, balanced approach across market participants.

The Securities and Exchange Board of India (Sebi) has unveiled a series of proposals to bolster risk monitoring and trading efficiency within the equity derivatives market. Central to these measures is the real-time tracking of Futures & Options (F&O) Open Interest, aimed at facilitating more informed decision-making and improved risk management for market participants.

According to a recent consultation paper, Sebi is suggesting updated methods for determining exposure limits for Mutual Funds and Alternative Investment Funds engaging in derivatives trading. This includes a shift towards measuring options exposure through the Future Equivalent or Delta basis, to better capture market sensitivity.

Furthermore, new position limits for index derivatives have been proposed to align with actual market risks. These changes, if implemented, will apply to all involved parties, including foreign portfolio investors, traders, and clients, ensuring consistent regulations. Public feedback on these proposals is invited until March 17, signifying Sebi's commitment to collaborative policy development.