Sebi tweaks position limits for currency derivative contracts. Check new numbers

By Livemint
Securities and Exchange Board of India

The Securities and Exchange Board of India (SEBI) on Tuesday revised the client level position limits for trading in cross-currency futures and options contracts. 

Sebi in a circular said that based on feedback received from stock exchanges and clearing corporations and upon a review of the same, it had been decided to revise the client level position limits, per stock exchange. 

Position limit refers to the highest number of options or futures contracts an investor is allowed to hold on one security. Gross open positions of the client across all contracts in the respective currency pairs will not exceed the limits set up by the market regulator.

For USD-INR, gross open position across all contracts will not exceed 6% of the total open interest or $20 million, whichever is higher. Earlier, the limit was $10 million.

In EUR-INR case, the gross open position across all contracts will not exceed 6 % of the total open interest or 10 million euros, whichever is higher. The limit was earlier fixed at 5 million euros.

For GBP-INR, gross open position across all contracts will not exceed 6% of the total open interest or 10 million pounds, whichever is higher. Earlier, limit was set at 5 million pounds.

For JPY-INR, gross open position across all contracts will not exceed 6 % of the total open interest or JPY 400 million Japanese yen, whichever is higher. Previously, the limit was 200 million Japanese yen.

"The revised position limits shall also apply to Non-Resident Indians (NRIs)  and   Category II Foreign Portfolio Investors (FPIs)  that are individuals, family offices, and corporates," Sebi said.

The position limits for Category I FPIs and Category II FPIs, other than individuals, family offices, and corporates, will continue to remain the same.

The exchange further said that exchanges or clearing corporations may specify additional safeguards/ conditions, as deemed fit, to manage risk and to ensure orderly trading. 

The revised limits will come into force with immediate effect.

The cross-currency futures and options contracts are available for trading in various pairs. A currency future is a contract to exchange one currency for another at a specified date at the exchange rate fixed on the purchase date.

(With inputs from PTI)


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