Overview

• SEBI opened a consultation, with comments due September 8, on how to implement its May rules requiring non-benchmark derivatives indices to have at least 14 stocks with caps of 20% for the top constituent and 45% for the top three, in descending weights.
• The paper weighs creating new compliant indices versus modifying existing ones, with exchanges and fund managers favoring restructuring current benchmarks and using a four-stage, four‑month glide path where large ETF assets are involved.
• NSE backs phased rebalancing for Nifty Bank (Rs 34,251 crore in ETF AUM) and a single-tranche change for Nifty Financial Services, while BSE prefers direct weight adjustments for Bankex, which has no ETFs tracking it.
• High concentration in Nifty Bank—HDFC Bank at about 29% and ICICI Bank at about 26.5%—could trigger sizable passive flows, with IIFL Capital estimating potential outflows of roughly $553 million from HDFC Bank and $416 million from ICICI Bank under the new caps.
• Separately, a SEBI panel is reconsidering intraday position limits and member exposure ceilings for index derivatives following the Jane Street case; an earlier intraday cap proposal was dropped, and in May SEBI set firms’ end‑of‑day options exposure at Rs 15 billion.