The position limit for Trading Members in client and proprietary transactions in index futures and options will now be higher at Rs 7,500 crore, or 15% of the total open interest in the market, according to a report released by market regulator SEBI on Tuesday.
The Securities and Exchange Board of India stated in a circular that the position limitations apply differently for index futures and index options. Prior to this, the trading member level (proprietary and client) overall position limit was greater at Rs 500 crore, or 15% of the market’s total open interest.
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The positions of market participants in the equity derivatives segment will now be monitored based on the total open interest of the market at the end of the previous day’s trade, according to SEBI, which noted that both the market and participants’ open interest are dynamic and changing throughout the day. Even if players’ positions stay the same, they could go above their limitations if market open interest declines the following day.
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Market participants would not be penalized or compelled to unwind their positions in such circumstances of passive breaches.
The new position limitations take effect right away, and on April 1, 2025, monitoring will begin based on the OI from the previous day.