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In order to ease trading in the currency derivatives segment, capital market regulator SEBI has clarified that while the position limit linked to open interest shall be applicable at the time of opening a position, it need not be unwound if there is a drop of total open interest in a currency pair at the stock exchange.
For different types of clients in different currency pairs, exchanges have limits on their gross open positions. The open interest refers to the number of futures and options contracts outstanding at a given point in time.
Even though the rules have been eased, eligible market participants will not be allowed to increase their existing positions or create new positions in the currency pair till they comply with the applicable position limits.
The regulator has asked exchanges to implement the circular and communicate the changes to brokers and clearing members.
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