Market Wide Position Limit (MWPL)
At the end of each day the Exchange disseminates the aggregate open interest across all Exchanges in the futures and options on individual scrips along with the market wide position limit for that scrip and tests whether the aggregate open interest for any scrip exceeds 95% of the market wide position limit for that scrip.
Consequences of MWPL exceeds 95% of the for that scrip:
If open interest for any scrip exceeds 95% of the market wide position limit for that scrip, than the Exchange takes note of open positions of all client/TMs as at the end of that day in that scrip, and from next day onwards the client/TMs should trade only to decrease their positions on overnight basis through offsetting positions till the normal trading in the scrip is resumed.
The normal trading in the scrip is resumed for overnight position only after the aggregate open interest across Exchanges comes down to 80% or below of the market wide position limit. Normal trading for intra-day position is not get affected and permitted.
Penalty for Market wide Position Limit violation
At the end of each day during which the ban on fresh positions is in force for any security, when any member or client has increased his existing positions or has created a new position in that security the client/trading members will be subject to a penalty 1% of the value of increased position subject to a minimum of Rs.5,000 and maximum of Rs.1,00,000. The positions, for this purpose, will be valued at the underlying close price.
Position limits of Trading members/FPIs (Category I & II)/Mutual Funds
The position limits of Trading members/FPIs (Category I & II)/Mutual Funds in equity index option and index futures is as under:
Index Futures
The position limits of Trading members/FPIs (Category I & II)/Mutual Funds in equity index futures contracts is higher of Rs.500 crores or 15% of the total open interest in the market in equity index futures contracts. This limit is applicable on open positions in all futures contracts on a particular underlying index.
Index Options
The position limits of Trading members/FPIs (Category I & II)/Mutual Funds in equity index option contracts is higher of Rs.500 crores or 15% of the total open interest in the market in equity index option contracts. This limit would be applicable on open positions in all option contracts on a particular underlying index.
Additional exposure in equity index derivatives
In addition to the above limits, in index futures and options, FPI Category (I &II)/MFs shall take exposure in equity index derivatives subject to the following limits:
- Short positions in index derivatives (short futures, short calls and long puts) not exceeding (in notional value) the FPI Category (I &II)/MFs holding of stocks.
- Long positions in index derivatives (long futures, long calls and short puts) not exceeding (in notional value) the FPI Category (I &II)/MFs holding of cash, government securities, T-Bills, money market mutual funds and gilt funds and similar instruments.
In this regard, if the open position of an FPI Category (I &II)/MF exceeds the limits as stated for Index Futures or Index Options, such surplus would be deemed to comprise of short and long positions in the same proportion of the total open positions individually. Such short and long positions in excess of the said limits shall be compared with the FPI Category (I &II)/MFs holding in stocks, cash etc. as stated above.
Futures and Option contracts on individual securities:
The position limits of Trading members/FPIs (Category I & II)/Mutual Funds in individual stocks is related to the market-wide position limit for the individual stocks. The combined futures and options position limit shall be 20% of the applicable Market Wide Position Limit (MWPL).
Position limits of Client/FPI (Category III)/Scheme of MF
The gross open position across all futures and options contracts on a particular underlying security, of each specific client, FPI (Category III) or scheme of MF, should not exceed the higher of:
1% of the free float market capitalization (in terms of number of shares)
or
5% of the open interest in all derivative contracts in the same underlying stock (in terms of number of shares) whichever is higher.
Penalty for Client wise/NRI/sub account of FII/scheme of MF position limit violation
In case of open position of any Client/NRI/sub-account of FII/scheme of MF exceeding the specified limit following penalty would be charged on client through the clearing member for each day of violation:
1% of the value of the quantity in violation (i.e., excess quantity over the allowed quantity, valued at the closing price of the security in the normal market of the Capital Market segment of the Exchange) per client
or
Rs.1,00,000 per client, whichever is lower, subject to a minimum penalty of Rs.5,000/- per violation/per client.
When the client level/NRI/sub-account of FII/scheme of mutual fund violation is on account of open position exceeding 5% of the open interest, a penalty of Rs.5000 per instance would be levied to the clearing member.
