Separate limit of Interest Rate Futures (IRFs) for Foreign Portfolio Investors (FPIs)
Summary
The circular allocates a separate INR 5,000 crore limit for Foreign Portfolio Investors to take long positions in Interest Rate Futures. It mandates that only net long positions are aggregated for calculation, with an individual cap of INR 1,800 crore per FPI. Stock Exchanges are required to monitor these limits and enforce square-off procedures for any breaches.
Text
allocate a separate limit of INR 5,000 crore to Foreign Portfolio Investors (FPIs) for taking long position in Interest Rate Futures (IRFs)
Para 13 (d) of Annexure 1 to SEBI Circular CIR/MRD/DRMNP/35/2013 dated December 05, 2013 and Para 13 (c) of Annexure 1 to SEBI Circular CIR/MRD/DRMNP/11/2015 dated June 12, 2015 stand partially modified
For each interest rate futures instrument, position of FPIs with a net long position will be aggregated. FPIs with a net short position in the instrument will not be reckoned.
No FPI can acquire net long position in excess of INR 1,800 crore at any point of time.
Stock Exchanges shall put in place necessary mechanism for monitoring and enforcing limits of FPIs in IRFs.
Stock Exchanges shall aggregate net long position in IRF of all FPIs taken together at end of the day and shall jointly publish/ disseminate the same on their website on daily basis.
Once 90% of the limit is utilized, Stock Exchanges shall put in place necessary mechanism to get alerts and publish on their websites the available limit, on a daily basis.
In case, there is any breach of the threshold limit, the FPI/s whose investment caused the breach shall square off their excess position/s within five trading days or by expiry of contract, whichever is earlier.
The limits prescribed for investment by FPIs in Government Securities (currently INR 301,500 crore) shall be exclusively available for investment in Government Securities.
Source: SecMarx — Separate limit of Interest Rate Futures (IRFs) for Foreign Portfolio Investors (FPIs). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.