SEBI ends expiry day margin benefit for single stock derivatives to curb risk
The new rule aligns treatment of single stock derivatives with index derivatives and is expected to give clients and brokers more time to manage margin requirements or close calendar spread positions on expiry days.
- Feb 5, 2026,
- Updated Feb 5, 2026 9:42 PM IST
In a key move aimed at strengthening risk management practices in the derivatives market, the Securities and Exchange Board of India (SEBI) has announced that calendar spread margin benefits will no longer be applicable on the expiry day for contracts involving single stock derivatives.
The regulator issued a circular on February 5, 2026, directing all stock exchanges and clearing corporations (excluding commodity derivatives exchanges) to implement this change following concerns raised by trading members and a review by the Secondary Market Advisory Committee (SMAC).
What changes
Currently, SEBI’s master circular (dated December 30, 2024) provides margin benefits for offsetting positions across different expiries — known as calendar spreads. However, this benefit was not extended to contracts expiring on the same day. The latest directive clarifies that for single stock derivatives, calendar spread benefits will now explicitly be unavailable on the expiry day for contracts that mature that day.
To illustrate, if monthly expiries fall on the 29th (current month), 30th (next month), and 31st (far month), then positions involving the 29th and 30th or the 29th and 31st will not receive calendar spread margin benefits on the 29th. However, positions involving the 30th and 31st will continue to get the benefit on the 29th.
Why the change?
SEBI noted that the earlier allowance posed risks of margin shortfalls on expiry days, potentially exposing clients and the system to sudden adverse price movements. The new rule aligns treatment of single stock derivatives with index derivatives and is expected to give clients and brokers more time to manage margin requirements or close calendar spread positions on expiry days.
The new margin framework will take effect three months from the date of the circular, providing market participants time to adjust systems and trading strategies. SEBI has asked stock exchanges and clearing corporations to make the necessary regulatory amendments and ensure system readiness for the change.
The regulator emphasised that the circular has been issued under its powers to protect investor interests and maintain market integrity under the SEBI Act, 1992.
In a key move aimed at strengthening risk management practices in the derivatives market, the Securities and Exchange Board of India (SEBI) has announced that calendar spread margin benefits will no longer be applicable on the expiry day for contracts involving single stock derivatives.
The regulator issued a circular on February 5, 2026, directing all stock exchanges and clearing corporations (excluding commodity derivatives exchanges) to implement this change following concerns raised by trading members and a review by the Secondary Market Advisory Committee (SMAC).
What changes
Currently, SEBI’s master circular (dated December 30, 2024) provides margin benefits for offsetting positions across different expiries — known as calendar spreads. However, this benefit was not extended to contracts expiring on the same day. The latest directive clarifies that for single stock derivatives, calendar spread benefits will now explicitly be unavailable on the expiry day for contracts that mature that day.
To illustrate, if monthly expiries fall on the 29th (current month), 30th (next month), and 31st (far month), then positions involving the 29th and 30th or the 29th and 31st will not receive calendar spread margin benefits on the 29th. However, positions involving the 30th and 31st will continue to get the benefit on the 29th.
Why the change?
SEBI noted that the earlier allowance posed risks of margin shortfalls on expiry days, potentially exposing clients and the system to sudden adverse price movements. The new rule aligns treatment of single stock derivatives with index derivatives and is expected to give clients and brokers more time to manage margin requirements or close calendar spread positions on expiry days.
The new margin framework will take effect three months from the date of the circular, providing market participants time to adjust systems and trading strategies. SEBI has asked stock exchanges and clearing corporations to make the necessary regulatory amendments and ensure system readiness for the change.
The regulator emphasised that the circular has been issued under its powers to protect investor interests and maintain market integrity under the SEBI Act, 1992.