Date:22/01/2006 URL: http://www.thehindubusinessline.com/2006/01/22/stories/2006012202460300.htm

Back Revised position limits on stock-based derivatives from Jan 27

Our Bureau

Mumbai , Jan. 21

FOREIGN institutional investors, mutual funds and other trading members can take higher position limits for stock-based derivatives from January 27.

In a circular to the stock exchanges, FIIs and mutual funds, the Securities and Exchange Board of India (SEBI) said for stocks having applicable market-wise position limit (MWPL) of Rs 500 crore or more, the combined futures and options position limit would now stand at 20 per cent of applicable MWPL or Rs 300 crore, whichever is lower. Within this, the stock futures position cannot exceed 10 per cent of applicable MWPL or Rs 150 crore, whichever is lower, the SEBI circular said. For stocks having applicable market-wise position limit (MWPL) less than Rs 500 crore, the combined futures and options position limit would be 20 per cent of applicable MWPL and futures position cannot exceed 20 per cent of applicable MWPL or Rs 50 crore, whichever is lower, the circular said.

However, the MWPL and client level position limits would remain the same as prescribed, the circular said.

The enhanced limits will enable participants to hedge their positions more effectively, especially for stocks with large market capitalisation and higher liquidity.