Securities Derivatives Oversight: SEBI Mandates Enhanced Risk Controls and Position Limit Recalibration for Market Stability

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....SEBI Circular on Derivatives Market Regulation: Key Legal Summary The circular introduces comprehensive measures to enhance trading convenience and strengthen risk monitoring in equity derivatives markets. Key regulatory interventions include: (1) reformulating open interest calculation using delta-adjusted future equivalent methodology, (2) recalibrating market-wide position limits to 15% of free float or 65x average daily delivery value, (3) implementing stricter position creation rules during ban periods, (4) establishing intraday monitoring mechanisms, and (5) introducing position limits for index options and futures with graduated implementation timelines from July 2025 to December 2025. The regulatory framework aims to improve market integrity, reduce manipulation risks, and provide enhanced surveillance capabilities for stock exchanges and clearing corporations.....