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MARKET-WIDE position limits on Single Stock Derivative Contracts stand modified in the following manner:

Market-wide limit: The market-wide limit of open position (in terms of the number of underlying stock) on futures and option contracts on a particular underlying stock shall be lower of

* * 30 times the average number of shares traded daily, during the previous calendar month, in the relevant underlying security in the underlying segment,

Or

* * 20 per cent of the number of shares held by non-promoters in the relevant underlying security i.e. free-float holding.

This limit would be applicable on all open positions in all futures and option contracts on a particular underlying stock.

Range expansion revoked: The requirement for doubling the price scans range and volatility scans range when the total open interest in a contract reaches 80 per cent of the market wide limit in that contract, stands revoked.

Implementation: The Exchange is advised to enforce the market wide limits through administrative measures, in the manner detailed below:

a. At the end of each day the Exchange shall test whether the market wide open interest for any scrip exceeds 95% of the market wide position limit for that scrip. If so, the Exchange shall take note of open position of all client / trading members as at the end of that day in that scrip, and from next day onwards the members/ client shall trade only to decrease their positions through offsetting positions.

While the Exchange will take this action only at end of day, they shall disclose real time information about the market wide open interest as a percentage of the market wide position limits.

Penalty: At the end of each day during which the ban on fresh positions is in force for any scrip, the Exchange shall test whether any member or client has increased his existing positions or has created a new position in that scrip.

If so, that client shall be subject to a penalty equal to a specified percentage (or basis points) of the increase in the position (in terms of notional value).

The penalty shall be recovered before trading begins next day. The Exchange shall specify the percentage or basis points, which shall be set high enough to deter violations of the ban on increasing positions.

Normal Trading: The normal trading in the scrip shall be resumed after the open outstanding position comes down to 80% or below of the market wide position limit.

Further, the Exchange shall check on a monthly basis, whether a stock has remained subject to the ban on new position for a significant part of the month consistently for three months. If so, then the Exchange shall phase out derivative contracts on that underlying. The procedure for dropping stocks on which option and future contracts are traded shall be in the manner specified in Clause (3) of Circular No. SMDRP/DC/CIR-13/02 dated December 18, 2002.

Trading member position limits

Earlier circulars on trading member position limits in equity index derivative contracts stand modified in the

following manner:

Index options: Trading Member Position limits in equity index option contracts:

The trading member position limits in equity index option contracts shall be higher of:

* * Rs.250 Crore

or

* * 15 per cent 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.

Index Futures: Trading Member Position limits in equity index futures contracts:

The trading member position limits in equity index futures contracts shall be higher of:

* * Rs.250 Crore

or

* * 15 per cent of the total open interest in the market in equity index futures contracts.

This limit would be applicable on open positions in all futures contracts on a particular underlying index.

Interest rate derivatives:

Trading member position limit in exchange traded interest rate derivative contracts shall be higher of:

* * Rs.500 Crore

or

* * 15 per cent of the total open interest in the market in exchange traded interest rate derivative contracts.

The Exchange shall implement the provisions of this circular with effect from September 1, 2004.

Source: www.sebi.gov.in

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