More curbs likely for index option trading - Times of India

[cvs]

@drsennath

why increase position limits for jane street and HFT , wont it create market risk on expiry day?

This matches the assertions @TIMEFRAME made a few months ago, that the intraday limits proposed are insufficient to prevent index-options market manipulation by a single entity, especially on the expiry day. I wonder what are these limits based on?

@TIMEFRAME

i think 1000cr to 2500cr is more then enough to shake or induce high volatility in the market during FNO expiry day

[Source]

Also, the Daily Brief post - Inside SEBI’s crackdown on Jane Street contains a few more numbers specific to Jane Street activities in the Index options markets, when SEBI determined that they were manipulating the market.

@Vignesh_pai

January 17, 2024 . This was Jane Street’s single most profitable day, where the fund earned a staggering ₹734.93 crore from index options alone.

@Vignesh_pai

For example, on Jan 17, BANKNIFTY options saw around ₹10,000 crore worth of premium turnover

Finally, here are

• the consultation paper date 24 Feb 2025 with few proposed limits.
• the previous circular dated 29 May 2025 with few interim limits.
• the latest SEBI circular dated 01 Sep 2025 that talks about the latest proposed limits (end-of-day limits, intraday limits, per-entity limits, steps to acquire additional exposure beyond stipulated limits, …) and the time-frame of gradual implementation and subsequent enforcement.

The circular mentions that the limits were arrived at after consulting with the SMAC / market-makers. So presumably they are some valid reasons why the major players involved (including brokers and major funds houses) need such slightly expanded limits to operate in the markets. Why exactly though?

Hopefully, someone with more practical knowledge of the markets can shed some light on the non-obvious nuances involved on how the updated framework of regulations can improve the market stability as the circulars claim to.