Procedure for re-introduction of derivatives contracts and modified position limits
Summary
This circular modifies the procedure for re-introducing derivatives contracts and updates position limits for stock and index derivatives. It establishes that stocks dropped from trading must meet eligibility criteria for three consecutive months to be re-introduced. Additionally, it sets new market-wide position limits for single stock derivatives and higher limits for Trading Members, FIIs, and Mutual Funds in index derivatives.
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The exit criteria shall be more flexible as compared to entry criteria... for a stock to become ineligible, the criteria for market wide position limit shall be relaxed upto 10% of the criteria applicable for the stock to become eligible... The stock should fail to meet the criteria for three consecutive months for the stock to be dropped out of the derivatives segment.
A stock which is dropped from derivatives trading may become eligible once again... the stock is required to fulfill the eligibility criteria for three consecutive months (instead of one month as specified earlier) to be re-introduced for derivatives trading. Derivative contracts on such stocks may be re-introduced by the exchange itself.
The market wide position limit shall henceforth be linked to the free float market capitalisation and shall be equal to 20% of the number of shares held by non-promoters in the relevant underlying security (i.e., free-float holding). This limit would be applicable on aggregate open positions in all futures and all option contracts on a particular underlying stock.
The trading member/FII/mutual fund position limits in equity index option contracts shall be higher of: Rs.500 Crore or 15% of the total open interest in the market in equity index option contracts. This limit would be applicable on open positions in all option contracts on a particular underlying index.
The trading member/FII/mutual fund position limits in equity index futures contracts shall be higher of: Rs.500 Crore or 15% of the total open interest in the market in equity index futures contracts. This limit would be applicable on open positions in all futures contracts on a particular underlying index.
Source: SecMarx — Procedure for re-introduction of derivatives contracts and modified position limits. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.