(Reuters) -India’s markets regulator late on Monday issued fresh rules for monitoring intraday positions in equity derivatives.
The Securities and Exchange Board of India has been reassessing the rules for equity derivatives after it temporarily banned U.S. high-frequency trading firm Jane Street from the Indian markets, saying some of its trading strategies were manipulative and left retail investors with losses.
The new framework, which will take effect from October 1, sets an intraday net position limit of 50 billion rupees ($571.39 million) per entity in index options, compared with an end-of-day limit of 15 billion rupees ($171.42 million).
Gross intraday exposure has been capped at 100 billion rupees ($1.14 billion), applied separately to long and short positions, according to SEBI’s statement.
Stock exchanges will monitor compliance using at least four random snapshots during the trading day, including one between 1445 IST and 1530 IST, when trading activity typically peaks, it added.
For entities breaching the limits, stock exchanges will examine trading patterns and seek an explanation for such positions.
Breach of the limits on the day of contract derivative expiry will attract a penalty, SEBI said, adding that the quantum of penalty will be decided by stock exchanges.
($1 = 87.5060 Indian rupees)
(Reporting by Ira Dugal and Aleef Jahan; Editing by Eileen Soreng and Mrigank Dhaniwala)
