No proposal to link options leverage limits to cash positions, says Sebi

The Securities and Exchange Board of India (Sebi) issued the statement after its chairman said that the regulator is stepping up surveillance to detect manipulation in derivatives trading

India's markets regulator said on Tuesday that there was no proposal under consideration to link options leverage limits to cash positions.

The Securities and Exchange Board of India (Sebi) issued the statement after its chairman said on Monday that the regulator is stepping up surveillance to detect manipulation in derivatives trading.

This comes just days after Sebi banned US securities trading firm Jane Street from the local market. 

Sebi's order, which also included the seizure of $567 million in Jane Street's funds, alleged that some of the firm's trading strategies manipulated stock indexes, causing losses for retail investors on the opposite side of those trades.

"Focus is on surveillance and enforcing Sebi's regulations on so-called violators", a source with direct knowledge of the matter said.

"Such limits would penalise the whole market," the source added.

A study released by the regulator on Monday showed retail investor losses on derivative trades widened by 41 per cent to ₹1.06 trillion in 2024-25. 

India is the world's largest derivatives market, accounting for nearly 60 per cent of the 7.3 billion equity derivatives traded globally in April, according to the Futures Industry Association.

The rapid growth in derivatives trading-driven largely by retail investors-has prompted Sebi to limit the number of contract expiries and increase lot sizes to make such trades more expensive.