The Securities and Exchange Board of India (SEBI) is considering capping intraday trading on expiry days of weekly options. This comes amidst concerns
about market manipulation and high trading volumes, particularly in indices like Nifty and Sensex.
New Intraday Limits
SEBI is considering imposing a Rs 1500 crore intraday limit on the expiry days of weekly options for indices like Nifty and Sensex. Currently, there's no intraday limit, but clients must adhere to an end-of-day net basis limit of Rs 1500 crore and a gross level of Rs 10,000 crore. This move aims to curb large trading volumes and outsized positions.
Jane Street's Impact
This potential restriction comes after SEBI took action against the US-based high-trading firm, Jane Street Group, due to alleged manipulation of Bank Nifty and Nifty. This highlights the regulator's commitment to maintaining market integrity and protecting investors from potential misconduct.
Index Restructuring Plan
SEBI also proposed a phased approach to restructure existing equity indices linked to derivatives contracts to prevent market manipulation. This includes restructuring three indices of banking stocks – NSE’s Nifty Bank, BSE’s Bankex, and Nifty Financial Services. The goal is to enhance market stability.
Expiry Day Concerns
A broker familiar with the committee’s deliberations noted that while clients usually follow end-of-day limits on non-expiry days, they often exceed these on expiry days, as contracts expire by market close. The discussions likely aim to curb the frenzied trading typically observed on these expiry days.
