Review of the framework of position limits for Interest Rate Futures contracts
Summary
The circular clarifies that position limits for Interest Rate Futures apply only when opening a new position, allowing existing positions to remain if open interest drops. Market participants are prohibited from increasing or creating new positions in the affected maturity bucket until they comply with applicable limits. Stock exchanges retain the power to direct participants to reduce positions for risk management purposes within prescribed timeframes.
Text
position limit linked to open interest shall be applicable at the time of opening a position. Such positions shall not be required to be unwound immediately by the market participants in the event of a drop of total open interest
such market participants shall not be allowed to increase their existing positions or create new positions in the Interest Rate Futures contracts of the respective maturity bucket till they comply with the applicable position limits
stock exchanges may direct them to bring down their positions to comply with the applicable position limits within the time period prescribed by the stock exchanges
take necessary steps to put in place systems for implementation of the circular, including necessary amendments to the relevant bye-laws, rules and regulations
bring the provisions of this circular to the notice of their members and also disseminate the same on their websites
communicate to SEBI, the status of implementation of the provisions of this circular in the Monthly Report
This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992
Source: SecMarx — Review of the framework of position limits for Interest Rate Futures contracts. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.