Stock brokers, who are not a bank, have been be permitted to take open positions worth the higher of USD 50 million/EUR 25 million/GBP 25 million/JPY 1000 million and 15 per cent of total open interest in these derivatives, according to a SEBI circular.

Earlier, the limits were the higher of USD 10 million/EUR 5 million/GBP 5 million /JPY 200 million and six per cent of the total open interest.

Open interest

Open interest is the number of contracts that remain ‘open’ and have not been delivered at the end of a trading day.

That is when an entity buys 10 contracts of a particular asset and sells five on a particular day, the open interest is ten minus five equalling five. However, volume is 15 (10 buy +5 sell).

Position limit

Position limit is the maximum value that can be bought by a stock broker and is the sum total of the value of derivative contracts bought on his own behalf (proprietary) and on behalf of clients.

The total position limits available to stockbrokers remains at the higher of USD 100 million/EUR 50 million/GBP 50 million/JPY 2000 million and 15 per cent of the total open interest.

Stock exchanges and clearing corporations have been directed to amend bylaws, inform brokers/clearing members, disseminate the information on their Web sites, besides communicating the implementation status to SEBI.

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