In March, SEBI bought about 4 major regulatory measure. These are explained in this post by @nithin
- Minimum margins for stocks without F&O contracts- If a stock has an intraday price range of more than 10% for 3 days in the last 1 month, the minimum margin will again be 40%. This again means a maximum intraday leverage of 2.5 times for these stocks.
This has been withdrawn. So minimum margin requirements for non-FO stocks will just be Var+ELM margins.
- Revision of MWPL for stock F&O-Stocks with high OI utilisation and/or price movement more than 15%(over the past 5 days, during March), the MWPL is cut to 50%
This has been withdrawn and pre-COVID MWPL limits will apply. The likelihood of stocks entering the ban period will reduce.
- Revised position limits for index F&O- Big traders, prop desks, FII’s, etc., bring a systemic risk to the markets in these uncertain and volatile times. SEBI has set certain position limits on index F&O contracts, to trade beyond which they would need to bring in 100% of the notional contract value in cash for being long or have stocks worth the notional value to short.
This position limit is set at Rs 500 crores of notional or contract value for futures and another Rs 500 crores for options positions (Rs 500 crores is approximately 7500 lots of Nifty at the current price). Further, this position limit is calculated on a net basis (based on risk), which means if you are long calls and long puts, your net overall position is 0 to calculate the position limit.
This measure will continue. However, this doesn’t affect retail traders.
- 15 minutes cooling-off period for F&O stocks at circuit breakers interval of 10%
This measure will continue. Probably a good thing for the markets as buying and selling activity increases at the circuit limits. Will continue to help reduce irrational moves during increased volatility.