CIRCULAR
SEBI/HO/MRD/MRD-PoD-2/P/CIR/2024/140 October 15, 2024
To
All recognised Stock Exchanges
All recognised Clearing Corporations
Dear Sir/ Madam,
Sub: Monitoring of position limits for equity derivative segment
1 Para 1.3.2.3 and para 2.3.2.3 of Chapter 5 of the Master Circular on Stock
Exchanges and Clearing Corporations (SECC), dated October 16, 2023, specifies
the overall position limit at the Trading member (TM) level (proprietary + client) to
be higher of INR 500 crores or 15% of the total Open Interest (OI) in market. This
position limit is separately applicable for all open positions on futures and options
contracts, in a particular underlying index.
2 Based on the feedback received from market participants, the deliberations held in
the Secondary Market Advisory Committee (SMAC) and further internal
discussions, the following has been decided:
2.1 The position limits for TMs, cumulatively for client and proprietary trades, in
index Futures and Options contracts may be set at higher of INR 7,500 crore
or 15% of the total OI in the market.
2.2 As per the extant practice, the position limits will be applicable for index futures
and index options separately.
3 It is also noted that that open interest of both the participants and the market is
dynamic and changing throughout the day. With a view of providing better clarity
to the market participants in terms of their position limits, the following has been
decided:
3.1 In conformity with the extant practice in currency derivatives segment,
positions of market participants in the equity derivatives segment (index and
stocks) shall also be monitored based on total open interest of the market at
the end of previous day’s trade.
3.2 In case of a drop in market OI compared to the previous day’s market OI,
market participants may breach the specified position limits even if their
positions have remained unchanged throughout the day.
3.3 For such cases of passive breaches, market participants would not be
penalised and not be required to unwind their positions.
4 The provisions of this circular shall come into effect as follows:
4.1 The provisions mentioned at para 2 above, would come into effect
immediately.
4.2 The provisions mentioned at para 3 above, would come into effect from April
01, 2025.
5 The Stock Exchanges and Clearing Corporations are accordingly advised to:
5.1 Make necessary amendments to the relevant bye-laws, rules and regulations
for the implementation of the above decision, as may be necessary/applicable.
5.2 Bring the provisions of this circular to the notice of the market participants
(including TMs) and to disseminate the same on their website.
6 This circular is being issued in exercise of powers conferred under Section 11 (1)
of the Securities and Exchange Board of India Act, 1992 to protect the interests of
investors in securities and to promote the development of, and to regulate the
securities market.
Yours faithfully,
Vishal Shukla
General Manager
Tel. No. 022-2644-9959
Email: vishals@sebi.gov.in