SEBI Tightens F&O Rules: New Proposals to Curb Manipulation

SEBI has proposed new rules to limit manipulation in the Futures and Options (F&O) market. These changes aim to improve market integrity. SEBI plans to change the calculation of Open Interest (OI) and introduce tighter monitoring.

The new method will use a delta-based framework for calculating OI. This will reflect the true price sensitivity of positions. SEBI also wants to reduce the market-wide position limit (MWPL) from 20% to 15% of a stock’s free-float market capitalization or 60 times the average daily delivery value (ADDV), whichever is lower.

SEBI will monitor position limits at least four times during a trading session. The goal is to ensure compliance and reduce the frequency of stocks entering the ban period. This would have reduced instances from 366 to 27 between July and September 2024.

These proposals aim to make it harder for firms to manipulate the F&O market. This will ensure a fairer and more transparent trading environment.