The rules of shares futures and options (F&O) are going to change from October 1. The definition of Market-Wide Position Limit (MWPL) has been replaced by SEBI. In the ban period, the rules of positions in stock have changed. Monitoring of the intraday position limit in index options will now be done in a new way. Now there will be individual entity level position limit in single stocks.
New MWPL rules
The maximum number of market-wide position limit (MWPL) or permitted bets will now be linked to the cash volume and free float of the stock. Its aim is to prevent a lot of positions. This limit will apply 15 % of free float or out of 65 times the cash volume on all exchanges.
Manipulation risk will decrease
Now! Mwpl The formula is based on 20 % of the number of non-promoters shares in a stock. Mwpl There will be a re -calculation of every three months, which will be based on the rolling cash volume in the last three months’ pariad. SEBI believes that linked to MWPL with the delivery volume of the cash market will reduce the risk of manipulation. Also, it will manage the derivative risk of underling cash market liquidity better than before.
Trade in F&O Stocks also allowed trade in ban period
Trade will be allowed in F&O Stocks in the ban period from October 1. The condition is that this should reduce portfolio risk. SEBI has said that after the entry of a stock in the ban period, FuteQ should be reduced on end of day basis. Right now if the stock enters the ban period, no new position can be created. For a share, if the market-wide open interest is more than 95 percent from the MWPL of that stock, then traders and brokers can offer positions to reduce their positions by offering positions.
New limit for intraday positions
To prevent oversize exposure in index derivatives, there will be a limit of Rs 5,000 crore per entity for net intra day positions. There will be a limit of Rs 10,000 crore for gross intraday positions. Exchanges will have to monitor positions through at least four random snapshots during the trading session. Violation of the limit will be penalty or surveillance deposits on expiry days. However, additional exposure will be allowed if complete banking of securities or cash collateral. The provision of penalty will be applicable from December 6, 2025 in the days of expiry.
New rules of MWPL limit in single stock
The new position limit for single stock derivatives has been fixed at 10 % of MWPL for individuals. It will be 20 per cent for property brokers and a total of 30 per cent for FPE and Brokers. SEBI announced these measures in May this year. SEBI has now also said that further additional steps will be taken in some stages. From November 3, new rules of eligibility for derivatives on non-Benchmark indices will apply. From December 6, there will also be pre-opening and post closing sessions for the F&O segment.
SEBI’s purpose stops too much spuits in F&O
SEBI has made these changes in the rules to prevent great speech and strengthen market stability in the F&O segment. SEBI issued a circular issue in May this year. Some of these measures were implemented from July. The rest are now being implemented in stages. In a year or two, SEBI’s focus has increased on speculative activity.