New Rules for Index Derivatives: SEBI has set new guidelines for index derivatives, including a mandatory Extreme Loss Margin (ELM) of 2% for short positions on expiry days. This rule, effective from November 20, 2024, aims to reduce volatility risks and protect investors from sudden market swings
Changes in Position Limits: SEBI has increased position limits for index options and futures to enhance liquidity and allow larger traders to manage their positions more effectively. This adjustment benefits institutional traders but may lead to higher capital requirements for retail traders
Impact on Margin Requirements: As part of SEBI's ongoing measures to curb excessive risk-taking, it has revised the margin requirements for certain F&O strategies. For instance, calendar spreads now require higher margins, significantly increasing the capital required for such trades
These changes are intended to ensure greater market stability, reduce excessive speculation, and protect retail investors from volatile trading environments. However, some traders have expressed concerns about the increased cost of trading in derivatives due to higher margin requirements.
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