The Impressive TimesMumbai, July 4 – The Securities and Exchange Board of India (SEBI) has stated that the ongoing regulatory response to the Jane Street trading case does not warrant sweeping new regulations, asserting that strong enforcement of existing rules is sufficient to maintain market integrity.
“Better enforcement of existing regulations can in fact pave the way for optimal regulation. On the flip side, more regulations cannot make up for poor enforcement,” a senior SEBI official told Moneycontrol.
The remark comes amid heightened scrutiny following SEBI’s action against Jane Street, one of the world’s most prominent proprietary trading firms. While the investigation into potential pattern-based manipulations continues, SEBI remains firm that its surveillance and enforcement tools are robust enough to detect and prevent such instances going forward.
Officials also pointed to recent reforms under the F&O 2.0 framework, particularly those rolled out starting July 1, which introduced delta-based monitoring of derivatives positions to more accurately track market activity and limit excessive speculation.
As part of a phased rollout to curb expiry-day volatility and speculative trading, SEBI introduced nine major measures, including:
Delta-Based Open Interest (FutEq OI): Measures sensitivity-adjusted market positions to give a more accurate risk profile.
Market Wide Position Limit (MWPL) Linked to Free Float & Cash Volume: From October 1, MWPL will be recalibrated using real-market liquidity metrics.
Single Stock Trading During Ban Periods: Trades allowed if they reduce overall portfolio risk and result in a net decrease in open interest.
Intraday Monitoring of OI (From Nov 3): Clearing corporations to conduct random checks during the day, triggering surveillance actions when thresholds are breached.
Index Options Position Limits Hiked: Gross position limit raised to ₹10,000 crore; end-of-day net limit set at ₹1,500 crore.
Eligibility Criteria for Non-Benchmark Index Derivatives: Minimum 14 constituents required; weightage caps for top stocks implemented.
Individual Entity Position Limits: Capped at 10% for individuals, 20% for proprietary brokers, and 30% for FPIs and brokers (effective Oct 1).
Pre-Open Session for F&O (From Dec 6): Futures contracts to follow pre-open mechanics similar to equity markets.
FutEq-Based Options Exposure for MFs & AIFs: Mutual Funds and AIFs to evaluate both long and short options using FutEq methodology.
These are in addition to earlier measures such as reduced weekly expiries, higher lot sizes, removal of calendar spread benefits on expiry, and upfront premium collection from buyers.
SEBI sources emphasized that the regulator’s shift is toward precision monitoring and strategic intervention, not a flurry of new regulations. The move reflects confidence in India’s maturing derivatives ecosystem, especially with reforms designed to align market behavior with responsible investing.
“Stronger tools, not stricter rules, are the need of the hour,” a SEBI insider summarized.
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