📈 Latest Stock Market Trading Rules in India (2025): Equity, F&O, Brokers & Tax Guide
Posted on July 8, 2025 by News Network · Updated in July 2025
Table of Contents
1. Why Rules Keep Changing 2. SEBI’s Role 3. Equity Trading Rules 4. Futures & Options (F&O) Rules 5. Broker & Platform Rules 6. Impact on Retail Traders 7. Tax Rules 8. FAQs 9. SEBI Circulars & Resources 10. Conclusion & Tips1. Why Stock Market Rules Keep Changing
• Surge in retail trading: FY 2024–25 saw a 41% rise in net losses by retail derivative traders, totaling ₹1.06 trillion 1.
• Market safety: SEBI has been tightening oversight after high-profile manipulation (e.g., Jane Street case) 2.
• Striking balance: Reforms aim to promote growth, while reducing speculative, aggressive risks 3.
2. SEBI’s Role in Market Regulation
The Securities and Exchange Board of India (SEBI) ensures investor protection, market fairness, transparency and systemic stability.
Key tools used include:
- Circulars: e.g.,
SEBI/HO/MRD/TPD-1/P/CIR/2025/79on May 29, 2025 4. - Monitoring & Surveillance: Including real-time position checks and exchange collaboration.
- Phased implementation: "Glide path" approach with notifications before penalties apply 5.
3. Updated Rules for Equity Trading
3.1 Intraday Margin & Leverage
Pre‑trade margin now mandatory across segments; intraday margin must be fully funded (100% of requirement), replacing T+1 margin calls 6.
Brokers cannot offer more than 5× leverage—and must fund the margin before accepting orders 7.
3.2 Pledge & Unpledge Automation
Securities pledged for margin now processed in real-time via depositories, removing manual T+1 delays 8.
3.3 Circuit Breakers & Market Timings
Circuit thresholds and 9 : 15 am pre-open call auction for equities remain intact to manage volatility.
3.4 Settlement Cycle
No change yet: still on T+2 settlement for equities.
4. Detailed Rules for Futures & Options (F&O)
4.1 Lot Size Revisions
SEBI increased lot sizes to curb hyperactive speculation. This started in FY24–25 and continues 9.
4.2 Contract Expiry Limits
Only one weekly expiry per exchange allowed, limited to benchmark indices. All F&O contracts now expire on either Tuesdays (NSE) or Thursdays (BSE) — effective Sept 1, 2025 10.
4.3 Open Interest (OI) Measurement
Shift from notional to Delta‑adjusted (“Fut‑Eq”) method for OI — enabling more precise leverage measurement 11.
4.4 Market‑Wide Position Limit (MWPL)
MWPL for single stocks now based on lower of 15% free-float or 65× average daily delivery value, with 10% floor. Applies from Oct 1, 2025 12.
Intraday MWPL monitoring at least 4 times a day; BWPL triggers extra margin/surveillance 13.
4.5 Position Limits for Index Derivatives
- Index options (PAN-level): Net OI ≤ ₹1,500 cr; Gross OI ≤ ₹10,000 cr — enforced from July 1, 2025; decoding glide till Dec 6 14.
- Index futures: Categorized caps (e.g. FPI, MF) — minimum Rs 500 cr or % of market OI 15.
- Intraday OI monitoring for indices continues but with phased implementation 16.
4.6 Ban‑Period Rules for Single Stocks
If OI breaches 95% of MWPL, the stock enters "ban period": only reduction allowed, no new positions or direction change. Applied from Oct 1, 2025 17.
4.7 F&O on Non‑Benchmark Indices
New indices need ≥14 stocks; max 20% single-stock weight; top 3 combined ≤45%. Effective Nov 3, 2025 18.
4.8 Expiry‑Day Margin Rules
- No calendar spread margin benefit on expiry day 19.
- Short positions subject to additional Extreme Loss Margin (~2%) on expiry 20.
- Option buyers must pay full premium upfront (already standard) 21.
4.9 Pre‑Open Session for Futures
SEBI introducing pre-open session for current-month futures from Dec 6, 2025 to tame opening volatility 22.
5. New Rules for Brokers & Platforms
- Real‑time margin display: Brokers must show Greeks, real-time MTM, margin alerts 23.
- Risk profiling: Mandatory quizzes/consent forms for options trading eligibility.
- Algo trading control: New call throttles and spike filters to curb micro‑volatility.
- Zero brokerage models: New entrants (e.g. Jio BlackRock) can offer free brokerage but must comply 24.
6. Impact on Retail & Other Traders
• Retail traders affected more: FY 2024–25 saw 91% of F&O users making net losses 25.
• Speculation curbed: Higher entry barriers (margins, lot sizes, expiry constraints, no calendar spreads on expiry).
• Hedgers/institutions benefit from structured frameworks (FutEq OI accuracy, clarity on limits).
• Brokers rebuild offerings: revenue pressure may shift to minimal fees, subscription services 26.
7. Updated Tax Rules (2025)
- Speculative vs Non‑Speculative Income: Intraday equity = speculative; F&O = non‑speculative.
- Turnover definition: F&O turnover = total premiums + realized gains/losses — can surpass audit thresholds 27.
- Audit trigger: High turnover may necessitate tax audit for retail traders.
- Carry‑forward: Non‑spec losses can be carried forward up to 8 years.
- GST on brokerage: +18% GST still applies on all brokerage fees.
8. FAQs
Q1: Why are expiry days capped per exchange?
A: To reduce chaotic rolling, overlapping expiry costs, arbitrage misuse, and curb speculative weekly trades 28.
Q2: Will I lose calendar spread margin on expiry?
A: Yes. On expiry day, calendar spreads aren’t margin-reduced, traders bear full margin for individual legs 29.
Q3: What is Fut‑Eq open interest?
A: It’s delta-adjusted OI that treats option exposure equivalent to futures in terms of sensitivity 30.
Q4: What if I exceed ₹1,500 cr net option position?
A: Exchanges will warn during glide period till Dec 5, 2025. Penalties start from Dec 6 if still in breach 31.
Q5: Can I trade more than 5× leverage intraday?
A: No. SEBI capped leverage at 5×, with 100% pre‑trade margin required, eliminating broker discretion 32.
9. Important SEBI Circulars & External Resources
- SEBI official site – check under Legal → Circulars for dates: May 29, Mar 28, May 26.
- NSE circulars/SOPs: SURV67436 (Apr 3, 2025).
- Zerodha’s compliance blog posts.
- Finshots explainer on F&O rules.
- Keep an eye on India’s derivatives rankings: largest globally, ~60% of 7.3 bn trades (April 2025) 33.
10. Conclusion & Expert Tips
✅ SEBI’s 2025 reforms aim to shift derivative trading from high-risk speculation to risk-aware, structured investing—balancing zeal with safety.
✅ Retail traders now face higher costs and stricter limits; best practice is to adopt hedging strategies, understand delta/OI, and ensure proper margin planning.
✅ Brokers must upgrade platforms constantly—real-time risk monitoring, margin transparency, and compliance features are now essential.
💡 Pro Tip: Use a strategy planner or excel to simulate margins, delta, and coverage before entering trades—especially on expiry days.
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Written by the News Network team — regulatory insight & market commentary. Bookmark for future updates.
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