Sebi Sets 30 Times Higher Limit For Brokers In F&O

Market regulator Sebi has announced an upward revision in the position limits for trading members in the index futures and options (F&O) contracts.

As per the new dictate, position limits for trading members, cumulatively for client and proprietary trades, in index F&O contracts are now set at Rs 7,500 crore or 15 per cent of the total open interest (OI) in the market, whichever is higher. Earlier it was Rs 500 crore or 15 percent of the total OI in the market. The limits are 30 times higher than the current limit for brokers.

“Master Circular on Stock Exchanges and Clearing Corporations (SECC), dated 16 October 2023, specifies the overall position limit at the Trading member (TM) level (proprietary and client) to be higher than Rs 500 crore or 15 per cent of the total Open Interest in market. This position limit is separately applicable for all open positions on futures and options contracts, in a particular underlying index,” SEBI said.

As per the current practice, the position limits will be applicable for index futures and index options separately, Sebi added.

Sebi has said that in line with the practice in currency derivatives segments, positions of market participants in the equity derivatives segment (index and stocks) shall also be monitored based on the total open interest of the market at the end of the previous day’s trade.

Further, in the case of a drop in market OI compared to the previous day’s market OI, market participants may breach the specified limits even if their positions remain unchanged throughout the day, Sebi said, adding that for such cases of passive breaches, market participants would not be penalised and neither required to unwind their positions.