What significant change did the Securities and Exchange Board of India (SEBI) implement in 2025 regarding derivatives trading?

Correct option is B

The correct answer is (b) Introduction of limits on open positions in index options to reduce trading risks.

Explanation:

• SEBI introduced intraday open position limits for index options effective 2025.

• A net intraday limit of ₹5,000 crore and a gross intraday limit of ₹10,000 crore per entity were mandated.

• These reforms closed loopholes that previously allowed unlimited intraday speculative positions.

• The change aimed to control excessive speculation and potential market manipulation.

• Exchanges must now monitor positions using multiple random intraday snapshots.

Information Booster:

• SEBI shifted open interest calculation from a notional basis to a delta-based (FutEq) method for accurate risk assessment.

• From February 1, 2025, full upfront premium payment for buying options became mandatory.

Additional Knowledge:

Lifting all trading regulations to enhance India’s appeal to investors (Option a)

• SEBI did not remove trading regulations; instead, it strengthened them to enhance market stability.

• Removing regulations would increase systemic risk.

• No such reform was proposed in 2025.

Eliminating the derivatives market entirely (Option c)

• India continues to maintain an active and regulated derivatives market.

• SEBI has focused on risk management, not elimination.

Allowing unrestricted foreign investment in derivatives (Option d)

• FPI participation in derivatives remains regulated under SEBI and RBI norms.

• No unrestricted access was provided in 2025.