The market regulator's secondary market advisory committee (SMAC) has increased the position limits for trading members, cumulatively for client and proprietary trades, in index futures & options contracts to ₹7,500 crore or 15% of the total open interest (OI).

SEBI says as per the extant practice, the position limits will be applicable for index futures & options separately. The decision was taken following feedback received from market participants, it says.

As per SEBI's 2023 master circular on stock exchanges and clearing corporations (SECC), the position limit at the trading member (TM) level was earlier set at ₹500 crore or 15% of the total open interest (OI) in the market. The position limit was separately applicable for all open positions on futures & options contracts, in a particular underlying index.

The regulator says the open interest of both the participants and the market is dynamic and changes throughout the day. To provide clarity to participants, it decided that in conformity with the extant practice in the currency derivatives segment, the positions of market participants in the equity derivatives segment (index and stocks) will also be monitored based on the total open interest of the market at the end of previous day’s trade.

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. "For such cases of passive breaches, market participants would not be penalised and not be required to unwind their positions," says the regulator.

The provisions related to position limits for trading members will come into effect immediately, while the mechanism for monitoring position limits will be applicable from April 1, 2025.

index f&o

Position limits in index F&O raised 15x to ₹7,500 cr