Watchdog Securities & Exchange Board of India eases trading norms for equity derivatives contract

With an aim to ease trading requirements, markets regulator Sebi on Tuesday relaxed the combined futures and options position limit of stock brokers, FPIs and mutual funds in equity derivatives to 20 per cent of the applicable Market Wide Position Limit. The decision has been taken in consultation with Sebi’s Secondary Market Advisory Committee. 

Currently, stocks having market-wise position limit of Rs 500 crore or more, the combined F&O position limit is 20 per cent of the MWPL or Rs 300 crore, whichever is lower and within which stock futures position cannot exceed 10 per cent of applicable MWPL or Rs 150 crores, whichever is lower. In case of stocks having market-wise position limit less than Rs 500 crore, the combined futures and options position limit is 20 per cent of the MWPL and futures position cannot exceed 20 per cent of the MWPL or Rs 50 crore which ever is lower.

Market Wide Position Limit (MWPL) is one of the key parameters in analysis of stocks that trade in the derivative segment. Now, Sebi has removed this clauses in order to ease trading requirements of stock brokers/Foreign Portfolio Investors (FPIs) Category I and II, mutual funds in equity derivatives segment. “The combined futures and options position limit shall be 20 per cent of the applicable Market Wide Position Limit” for such categories, Sebi said in a circular.