FII / MF Position Limits

Position Limits

The position limits for FII, Mutual Funds , FII sub-accounts & MF schemes are monitored based on the Custodian Participant (CP) Codes allotted to these entities by NSCCL. The applicable position limits are as under:

At the level of the FII and MF

  • FII & MF Position limits in Index options contracts:
    FII and MF position limit in all index options contracts on a particular underlying index are Rs.500 crores or 15 % of the total open interest of the market in index options, whichever is higher. This limit is applicable on open positions in all options contracts on a particular underlying index.
  • FII & MF Position limits in Index futures contracts:
    FII and MF position limit in all index futures contracts on a particular underlying index is Rs.500 crores or 15 % of the total open interest of the market in index futures, whichever is higher. This limit is applicable on open positions in all futures contracts on a particular underlying index.

    In addition to the above, FIIs & MF’s can take exposure in equity index derivatives subject to the following limits:

    a. Short positions in index derivatives (short futures, short calls and long puts) not exceeding (in notional value) the FII’s / MF’s holding of stocks.

    b. Long positions in index derivatives (long futures, long calls and short puts) not exceeding (in notional value) the FII’s / MF’s holding of cash, government securities, T-Bills and similar instruments.

    In this regard, if the open positions of an FII / MF exceeds the limits as stated in item no a or b, such surplus is deemed to comprise of short and long positions in the same proportion of the total open positions individually. Such short and long positions in excess of the said limits are compared with the FII’s / MF’s holding in stocks, cash etc as stated above. Members are required to report their holdings in stocks, cash etc in a specified format.

  • Stock Futures & Options:

    a. For stocks having applicable market-wide position limit (MWPL) of Rs. 500 crores or more, the combined futures and options position limit is 20% of applicable MWPL or Rs. 300 crores, whichever is lower and within which stock futures position cannot exceed 10% of applicable MWPL or Rs. 150 crores, whichever is lower.

    b. For stocks having applicable market-wide position limit (MWPL) less than Rs. 500 crores, the combined futures and options position limit is 20% of applicable MWPL and futures position cannot exceed 20% of applicable MWPL or Rs. 50 crore which ever is lower.

Download file for combined futures and options position limit. (.csv)

Download file for stock futures position . (.csv)

At the level of the FII sub-account / MF scheme

Index Futures & Options:
A disclosure is required from any person or persons acting in concert who together own 15% or more of the open interest of all futures and options contracts on a particular underlying index on the Exchange. Failure to do so is treated as a violation and l attracts appropriate penal and disciplinary action in accordance with the Rules, Bye-Laws and Regulations of NSE/NSCCL.

Stock Futures & Options:
The gross open position across all futures and options contracts on a particular underlying security, of a sub-account of an FII, / MF scheme should not exceed the higher of :

  • 1% of the free float market capitalisation (in terms of number of shares)
    or
  • 5% of the open interest in the derivative contracts on a particular underlying stock (in terms of number of contracts). These position limits are applicable on the combined position in all futures and options contracts on an underlying security on the Exchange.

Procedures

The Clearing Corporation monitors the FII position limits at the end of each trading day. For this purpose, FIIs/sub-account of FII intending to trade in the F&O segment of the Exchange are required to take a custodian participant (CP) code from NSCCL.

Only FIIs/ sub accounts of FIIs which have been allotted a unique CP code by Clearing Corporation are permitted to trade on the Exchange.

The FII/ sub-account of FII should ensure that all orders placed by them on the Exchange carry the relevant CP code allotted by Clearing Corporation in the relevant field in NEATFO trading system.

Clearing Member/s of the FII are required to submit the details of all the trades confirmed by FII to Clearing Corporation, by the end of each trading day, as per the mechanism specified.

Clearing Corporation monitors the open positions of the FII/ sub-account of the FII for each underlying security and index on which futures and option contracts are traded on the Exchange, against the position limits specified at the level of FII/ sub-accounts of FII respectively, at the end of each trading day.

In the event of an FII breaching the position limits on any underlying, Clearing Corporation advises the Exchange to withdraw the facility granted to such FII to take any fresh positions in any derivative contracts. Such FII is required to reduce their open position in such underlying, in accordance with the mechanism provided by Clearing Corporation from time to time. The facility withdrawn is reinstated upon due compliance of the position limits.

It is also obligatory on FIIs to report any breach of position limits by them / their sub-account/s, to Clearing Corporation and ensure that such sub-account/s does not take any fresh positions in any derivative contracts in such underlying. The sub-account of FII is required to reduce open position in such underlying, in accordance with the mechanism specified by Clearing Corporation and is permitted to take further positions only upon due compliance of the position limits.

Computation of Position Limits

The position limits are computed on a gross basis at the level of a FII and on a net basis at the level of sub-accounts and proprietary positions.

The open positions for all derivative contracts are valued as the open interest multiplied with the closing price of the respective underlying in the cash market.

Related Links

Watch the market live!
Get real-time market analyses!
More about our Risk Management practices

You may also be
interested in:

Did You Know

The higher the Percent of Deliverable Quantity to Traded Quantity the better - it indicates that most buyers are expecting the price of the share to go up.

More investment concepts