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If you trade weekly index options in India, the product you traded in 2023 no longer exists in the same form. Between November 2024 and April 2026, SEBI and the Finance Ministry introduced a series of changes to index derivatives. Lot sizes went up, then came down. Weekly expiry products were cut. A cash margin rule arrived. STT on futures jumped 150%. A new method for calculating open interest changed how position limits work.

This article covers every change with verified numbers, the actual dates each rule came into force, the official circular behind each change, and what it means before placing a trade today.

Why SEBI Stepped In

Retail traders in India’s F&O segment lost Rs 1.80 lakh crore on derivatives in the years leading up to 2026. Over 90% of retail F&O participants were on the losing side, year after year. India’s weekly index options market had grown into one of the largest in the world by contract volume, but the regulator’s data showed that most of this volume came from retail traders chasing short-term premium decay with inadequate capital and no structured risk plan.

The resulting rules were not introduced in one circular. They came in phases across nearly two years, and each phase closed a different gap in how the derivatives market was being used.

What Are SEBI's New F&O Rules?

SEBI’s new F&O rules are a set of regulatory changes to index derivatives trading in India, introduced from November 2024 through April 2026. They cover contract size, lot size, weekly expiry structure, margin collection, transaction tax, and position limit calculation methods.

The rules primarily target index futures and options. The lot size changes, weekly expiry restrictions, expiry day margin rules, and the shift to FutEq open interest all apply to index products. The cash margin rule and STT hike apply broadly across F&O.

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Full Timeline of Changes

November 20, 2024: Contract Value and Lot Size Revision

Governing circular: SEBI/HO/MRD-PoD2/CIR/P/2024/00181, December 30, 2024

NSE implementation circular: NSE circular dated October 18, 2024

SEBI raised the minimum contract value for index derivatives to between Rs 15 lakh and Rs 20 lakh. NSE and BSE revised lot sizes for all new index F&O contracts introduced from November 20, 2024, onward.

Existing weekly and monthly contracts continued with old lot sizes until their respective expiries. Quarterly and half-yearly contracts transitioned at the end of the day on December 26, 2024, for Nifty and December 24, 2024, for Bank Nifty.

Lot sizes that came into effect on November 20, 2024:

Index

Lot Size Before Nov 2024

Lot Size From Nov 2024

Nifty 50

25

75

Bank Nifty

15

30

Nifty Financial Services

25

65

Nifty Midcap Select

50

120

Nifty Next 50

10

25

BSE Sensex

10

20

BSE Bankex

15

30

January 2026: Lot Sizes Revised Downward

NSE circular: NSE FAOP70616, October 2025

Following the December 2025 expiry, NSE introduced revised lot sizes for all contracts from January 2026 onward. The revision was made to realign contract sizes with current index levels after the November 2024 increase had pushed contract values above the target range.

Lot sizes as revised per NSE circular FAOP70616:

Index

Lot Size From Nov 2024

Current Lot Size From Jan 2026

Nifty 50

75

65

Bank Nifty

30

30

Nifty Financial Services

65

60

Nifty Midcap Select

140

120

Nifty Next 50

25

25

Weekly contracts reflected this change from the first January 2026 expiry. Existing quarterly and half-yearly contracts transitioned to the revised lot size at the end of the day on December 30, 2025.

November 20, 2024: Weekly Expiries Restricted to One Index Per Exchange

Governing circular: SEBI/HO/MRD-PoD2/CIR/P/2024/00181

Each exchange was restricted to offering weekly expiry contracts for only one benchmark index. NSE discontinued weekly expiries for Bank Nifty, Nifty Financial Services, and Nifty Midcap Select from November 20, 2024.

Current weekly expiry schedule as of June 2026:

Index

Exchange

Weekly Expiry Day

Nifty 50

NSE

Every Tuesday

Sensex

BSE

Every Friday

Bank Nifty

NSE

Monthly only

FinNifty

NSE

Monthly only

Nifty Midcap Select

NSE

Monthly only

Bank Nifty has no weekly expiry contract on NSE today.

November 20, 2024: 2% Extra Margin for Option Sellers on Expiry Day

Governing circular: SEBI/HO/MRD-PoD2/CIR/P/2024/00181

Sellers of index options must maintain an additional 2% Extreme Loss Margin on the expiry day of the contract. This is charged over and above the standard ELM already applicable to the position.

Worked example:

Nifty is at 24,500. You have sold one lot of a Nifty call option expiring today. Current lot size is 65 per NSE FAOP70616.

Additional ELM = 2% of 24,500 multiplied by 65 = Rs 31,850 in extra margin required on expiry day

Sellers who do not account for this will receive a shortfall notice or face forced square-off before the contract expires.

November 20, 2024: Calendar Spread Margin Benefit Removed on Expiry Day

Governing circular: SEBI/HO/MRD-PoD2/CIR/P/2024/00181

A calendar spread is a position where a trader holds the same index across two different expiry months. This structure previously allowed a reduced combined margin because the two legs offset each other partially.

From November 20, 2024, this offset no longer applies on the expiry day for the leg that is expiring. The expiring position must carry full margin regardless of any hedging in later-month contracts.

February 1, 2025: Full Options Premium Collection Upfront

Governing circular: SEBI/HO/MRD-PoD2/CIR/P/2024/00181

Brokers must collect the complete options premium from buyers at the time of order placement. Arrangements that allowed premiums to be settled after execution are no longer permitted. Every options buy position requires the full premium available as cash in the trading account before the order goes through.

April 1, 2025: Position Limits Monitored Intraday

Governing circular: SEBI/HO/MRD-PoD2/CIR/P/2024/00181

Position limit monitoring shifted from end-of-day checks to multiple intraday snapshots throughout the trading session. Before this change, a trader could build larger exposure during market hours and reduce it before close to appear within limits at day’s end. Intraday monitoring removed that window.

October 1, 2025: Intraday Net FutEq Position Cap Introduced

Governing framework: SEBI FutEq proposal, February 2025, as covered in the SEBI consultation

From October 1, 2025, an intraday net position cap of Rs 5,000 crore on a FutEq basis was applied to each entity, replacing the previous end-of-day limit structure. A gross position cap of Rs 10,000 crore on both long and short sides came into effect simultaneously.

2025: FutEq Open Interest Replaces Notional OI

SEBI proposal reference: SEBI consultation paper on delta-based OI, February 2025

SEBI replaced notional open interest with a delta-based measure called Futures Equivalent (FutEq) for calculating position limits.

Under notional OI, every options contract counted equally toward position limits regardless of how much the option moved relative to the index. A deep out-of-the-money call with a delta of 0.05 and an at-the-money call with a delta of 0.50 both counted as one unit.

Under FutEq:

FutEq OI = Delta multiplied by Notional Value

Example using verified figures from Zerodha’s FutEq brief:

100 lots of Nifty call options with a delta of 0.5 and a notional Rs 100 crore gives a FutEq OI of Rs 50 crore. 100 lots of short put options with a delta of 0.7 and a notional of Rs 100 crore gives a FutEq OI of Rs 70 crore. Gross FutEq OI across both positions = Rs 120 crore.

Traders with large short option books will find their effective exposure is higher under FutEq than it appeared under notional OI.

Net FutEq limit per trader per index: Rs 1,500 crore. Gross cap: Rs 10,000 crore.

April 1, 2026: 50% Cash Margin Requirement

Governing circular: SEBI/HO/MRD-PoD2/CIR/P/2024/00181

From April 2026, at least 50% of the total margin required for any open F&O position must be held in cash or cash equivalents. The remaining 50% can come from pledged shares or other approved non-cash collateral.

Before this rule, a trader could meet the full margin requirement through pledged securities alone. That is no longer possible.

Direct impact: If the total margin for an open position is Rs 2 lakh, Rs 1 lakh must be in cash in the account, not pledged shares, not mutual fund units. Cash only.

April 1, 2026: STT Hike on F&O Trades

Source: Budget 2026, announced by Finance Minister Nirmala Sitharaman on February 1, 2026. NDTV Budget 2026 STT report

This is not an SEBI circular. It is a Finance Bill change that took effect from April 1, 2026, and is enforced at the exchange level.

Exact STT rate changes verified from the Ventura Securities STT hike article and ICICI Direct Budget 2026 STT explainer :

Instrument

STT Before April 2026

STT From April 2026

Change

Futures (sell side)

0.02% of turnover

0.05% of turnover

Up 150%

Options premium (sell side)

0.10% of the premium

0.15% of premium

Up 50%

Options on exercise

0.125% of settlement

0.15% of settlement

Up 20%

Rupee impact on actual trades from Ventura Securities:

A Rs 1 lakh futures trade previously attracted Rs 20 in STT. From April 2026, the same trade attracts Rs 50.

A Rs 50,000 options premium trade previously attracted Rs 50 in STT. From April 2026, the same trade attracts Rs 75.

STT is charged on every trade regardless of whether the position is profitable or at a loss. A losing trade and a winning trade of identical size attract the same STT amount. For traders who rely on capturing small premiums frequently, the higher tax directly raises their breakeven on every single position.

NSE unique F&O accounts dropped from 1.06 crore in FY25 to 75 lakh as of December 2025, before the STT hike even came into effect. Market estimates put the expected further decline at 20 to 30% in F&O volumes following the April 2026 rate increase.

What Changed at Broker Level

Zerodha doubled its intraday F&O brokerage to Rs 40 per order for traders who did not maintain the 50% cash collateral requirement. For a trader placing 15 orders a day, brokerage alone increases from Rs 300 to Rs 600 per day, which amounts to roughly Rs 12,000 to Rs 15,000 in additional monthly costs.

Groww revised its minimum brokerage from Rs 2 to Rs 5 per order on certain trade types following the compliance cost changes. While the per-trade amount looks small, it compounds across an active month of weekly expiry trades.

Both changes are a downstream consequence of SEBI compliance requirements, with brokers passing a portion of their regulatory costs through revised fee structures.

Participation Data After the Rules

The drop in retail activity is measurable and documented.

Retail F&O participation fell by approximately 20% after November 2024. Retail options premium volume dropped from a peak of Rs 25,000 crore in mid-2024 to around Rs 15,100 crore by February 2025. NSE retail options contracts fell from 397 million in October 2024 to 68 million by February 2025, over 80% in four months.

Across Groww, Zerodha, Angel One, and Upstox, approximately 20 lakh active users exited platforms in 2025, with around 6 lakh leaving in June 2025 alone. The exits were concentrated among small-ticket retail F&O traders.

Practical Example: Priya's Trading Before and After

Priya is a retail trader from Bengaluru who started trading Bank Nifty weekly call spreads in 2022 with Rs 2 lakh of trading capital. A call spread involves selling one call and buying another at a higher strike to cap the maximum loss while collecting a net premium. It is a structured, defined-risk approach.

Her trading setup in mid-2024:

Bank Nifty had a weekly expiry every Wednesday with a lot size of 15. Her Rs 2 lakh comfortably covered one call spread position with a margin buffer. She had four weekly index products available on NSE when Bank Nifty conditions were unclear.

Her situation in June 2026:

Bank Nifty has no weekly expiry on NSE. Only monthly contracts exist. Current Bank Nifty lot size is 30 per NSE FAOP70616. Her only weekly option for index trading on NSE is Nifty 50, which expires every Tuesday with a current lot size of 65.

On expiry day, selling Nifty options triggers the extra 2% ELM per SEBI/HO/MRD-PoD2/CIR/P/2024/00181. With Nifty at 24,500 and a lot size of 65, that is Rs 31,850 in additional margin required on that day.

From April 2026, at least 50% of her total margin must be in cash. If a position requires Rs 1.20 lakh in total margin, Rs 60,000 must be liquid cash.

An Rs 50,000 options premium sale now costs Rs 75 in STT instead of Rs 50, per Ventura Securities STT analysis. That extra Rs 25 per trade accumulates across an active month of weekly Nifty trades.

Her Rs 2 lakh capital can still support a single carefully sized position, but the product landscape she built her strategy around no longer exists. She has one weekly index product instead of four, a higher cash reserve requirement, and higher STT on every trade.

Complete Rule Change Reference Table

Parameter

Before Nov 2024

Nov 2024 Change

Current Position June 2026

Minimum contract value

Rs 5 to 10 lakh 

Raised to Rs 15 to 20 lakh 

Maintained at Rs 15 to 20 lakh

Nifty 50 lot size

25 

Raised to 75 

Revised to 65 from Jan 2026 

Bank Nifty lot size

15 

Raised to 30 

30 unchanged 

Nifty Fin Services lot size

25 

Raised to 65 

Revised to 60 from Jan 2026 

Nifty Midcap Select lot size

50 

Raised to 140 

Revised to 120 from Jan 2026 

Weekly experiences on NSE

4 indices 

Cut to Nifty 50 only 

Nifty 50 only, every Tuesday 

Expiry day seller margin

Standard ELM 

Standard plus 2% extra 

Still applies 

Calendar spread on expiry day

Available 

Removed from Nov 2024 

Still removed 

Options premium collection

Deferred allowed 

Upfront from Feb 2025 

Upfront mandatory 

Position monitoring

End of day 

Intraday from Apr 2025 

Intraday plus Rs 5,000 crore FutEq cap from Oct 2025 

OI calculation

Notional 

FutEq from 2025 

FutEq, net cap Rs 1,500 crore 

Cash margin requirement

No split 

Not yet

50% must be cash from Apr 2026 

STT on futures (sell)

0.02% 

0.02% unchanged

0.05% from Apr 2026 

STT on options premium (sell)

0.10% 

0.10% unchanged

0.15% from Apr 2026 

Advantages of the New Rules

  1. Casual overleveraging is now structurally harder. Before the cash margin rule, a trader with Rs 4 lakh in pledged shares and minimal cash could hold large index options positions. That now requires Rs 2 lakh in liquid cash. For traders who do not track margin closely, this forces a natural limit on position size before the market does it for them.
  2. Fewer weekly expiry products reduce concentrated expiry-day risk. With only Nifty 50 carrying a weekly expiry on NSE, there is less compressed weekly activity and fewer coordinated moves around expiry time that historically damaged retail option sellers.
  3. FutEq OI reflects actual market sensitivity. Under notional OI, a deep out-of-the-money and a near-the-money option counted equally. Under FutEq, the calculation reflects real delta exposure. Traders get a more accurate picture of what their book actually represents in risk terms.
  4. The January 2026 lot size revision partially restored retail access. Nifty 50 going from 75 to 65 reduced per-lot margin compared to the November 2024 peak, making single-lot positions more affordable than they were in mid-2025.

Risks and Limitations

  1. The STT hike cuts directly into every strategy’s profitability. A Rs 1 lakh futures trade now costs Rs 50 in STT instead of Rs 20. Any strategy built on capturing Rs 20 to Rs 30 per lot in net premium needs a full recalculation at the new tax rate before placing another trade.
  2. The 50% cash rule reduces capital efficiency on simultaneous positions. When half of every open position’s margin must sit as cash, a trader with Rs 3 lakh working capital effectively has Rs 1.5 lakh locked as a reserve whenever positions are open.
  3. Broker charges compound quickly for active traders. Zerodha’s Rs 40 per order charge for non-compliant intraday traders adds Rs 12,000 to Rs 15,000 per month for someone placing 15 orders daily, before even accounting for higher STT.
  4. Monthly expiry strategies lock up capital for four weeks. Traders who moved from weekly Bank Nifty to monthly alternatives now tie up margin for four weeks instead of one, changing the entire capital cycle and reducing flexibility to respond to market moves.

Common Mistakes Beginners Make Today

  1. Using November 2024 lot size numbers. Many online calculators and older articles still show the Nifty 50 at 75 and the Bank Nifty at 30 from November 2024. Per NSE circular FAOP70616, Nifty 50 is 65 and Bank Nifty is 30 from January 2026. Using the wrong number gives the wrong margin estimate.
  2. Treating pledged shares as equivalent to cash. Pledged shares can meet only 50% of the margin requirement per the April 2026 rule. A trader with Rs 4 lakh in pledged shares and Rs 10,000 cash cannot hold a position requiring Rs 1.5 lakh in margin since the cash component alone fails the 50% test.
  3. Looking for Bank Nifty weekly contracts on NSE. Bank Nifty has no weekly expiry on NSE. Only monthly contracts are available. The only weekly index on NSE is Nifty 50 with Tuesday expiry.
  4. Not accounting for the 2% ELM on expiry day. Sellers who calculate only standard margin and carry positions to expiry will face a shortfall or forced square-off even when the directional view is correct.
  5. Not recalculating breakeven after the STT hike. STT is charged on every trade win or loss. At 0.05% on futures and 0.15% on options premiums from April 2026, strategies that were profitable at the old rates may no longer cover their tax burden at the same win rate.

Who This Segment Works for Today

Suitable for traders who:

  • Hold at least Rs 3 to 5 lakh dedicated to F&O, with Rs 1.5 lakh of that as liquid cash to meet the 50% margin rule on open positions
  • Understand margin mechanics, expiry day dynamics, and FutEq position limit calculations before placing a trade
  • Can operate with monthly expiry cycles after losing access to Bank Nifty and FinNifty weekly products
  • Have recalculated strategy profitability using the April 2026 STT rates and confirmed the edge still holds

Less suitable for traders who:

  • Have less than Rs 1.5 lakh in liquid capital and want to learn through live positions
  • Built their approach entirely on Bank Nifty, FinNifty, or Midcap Select weekly options
  • Use scalping or high-frequency small-premium strategies that depend on low per-trade transaction costs

Conclusion

Between November 2024 and April 2026, SEBI and the Finance Ministry changed every major lever in India’s index derivatives market: contract value, lot sizes, weekly expiry structure, expiry-day margin, calendar spread treatment, premium collection, position monitoring, cash margin split, and STT.

Three things every active F&O trader should verify today: first, that position sizes are calculated on current lot sizes per NSE circular FAOP70616 and not 2024 figures; second, that at least 50% of open position margin is held as cash per SEBI/HO/MRD-PoD2/CIR/P/2024/00181; and third, that strategy profitability has been recalculated using the current STT rate of 0.05% on futures and 0.15% on options premium from Budget 2026.

If you are ready to start trading with a broker that keeps you updated on all regulatory changes, open a free Demat and Trading account with Alice Blue and get access to index futures and options on NSE and BSE with zero account opening charges.

Frequently Asked Questions

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A set of regulatory changes introduced from November 2024 through April 2026 covering contract size, lot size, weekly expiry structure, expiry-day margin, upfront premium collection, intraday position monitoring, FutEq open interest, and a 50% cash margin requirement. The STT hike came from Budget 2026, not a SEBI circular, effective April 1, 2026. Full details in SEBI Master Circular SEBI/HO/MRD-PoD2/CIR/P/2024/00181.

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65 units per NSE circular FAOP70616, effective from January 2026 contracts onward. The lot size was 25 before November 2024, raised to 75 in November 2024, and revised to 65 from January 2026.

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No. Bank Nifty weekly expiry contracts no longer exist on NSE. Only monthly Bank Nifty contracts are available. For weekly index options, Nifty 50 expires every Tuesday on NSE, and Sensex expires every Friday on BSE.

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If your total margin requirement for an open F&O position is Rs 2 lakh, Rs 1 lakh must be in cash in the trading account. Pledged shares or mutual fund units can meet the remaining Rs 1 lakh, but cannot replace the cash half. This rule is part of SEBI/HO/MRD-PoD2/CIR/P/2024/00181 and came into effect in April 2026.

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STT on futures sales increased from 0.02% to 0.05% of turnover. STT on options premium sales increased from 0.10% to 0.15%. Exercise options moved from 0.125% to 0.15%. A Rs 1 lakh futures trade now costs Rs 50 in STT, up from Rs 20 earlier. An Rs 50,000 options premium trade now costs Rs 75 vs Rs 50 before. This was announced in Budget 2026 and is not a SEBI rule.

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FutEq calculates open interest as delta multiplied by notional value instead of counting each contract as one unit. A Nifty call option with a delta of 0.5 and a notional value of Rs 100 crore counts as Rs 50 crore of FutEq OI. The net FutEq position limit per trader per index is Rs 1,500 crore with a gross cap of Rs 10,000 crore. Traders with large short-option books may find their real exposure is significantly higher under FutEq than it appeared under notional OI—full proposal at SEBI FutEq consultation, February 2025.