SEBI’s New Margin Rules Aim to Curb Expiry Day Risks

Securities and Exchange Board of India (SEBI) has introduced stricter margin rules for traders dealing in single-stock futures and options spreads, especially on expiry days. This move is designed to reduce risks and ensure fair play in the derivatives market.

Earlier, traders could benefit from lower margins when they held spread positions, as risks were considered limited. However, SEBI observed that on expiry days, these spreads often lose their protective nature, exposing the market to sudden volatility. To address this, SEBI has directed clearing corporations to collect higher margins for such positions on expiry days.

This change means traders will now need to maintain additional funds in their accounts when carrying spread positions till expiry. The regulator believes this will discourage excessive speculation and safeguard market stability.

Market experts say the new rule will impact strategies that rely heavily on expiry-day spreads. While it may increase costs for traders, it will also strengthen risk management and protect investors from unexpected losses.

In simple terms, SEBI wants to make sure that expiry-day trading does not create unnecessary shocks in the system. By tightening margin rules, the regulator is prioritising safety and fairness over short-term gains.