The Securities and Exchange Board of India vide notification dated 3rd February, 2020 has fixed the position limits for eligible market participants on stock exchanges at international financial services centres (IFSCs) for currency futures and options contracts involving the Indian rupee.
RBI in its earlier circular dated 20th January 2020 has issued directions under the Foreign Exchange Management Act for introduction of Rupee derivatives at IFSC.
The currency futures and options contracts involving the Indian rupee (with settlement in foreign currency), the position limits for eligible market participants, per currency pair per stock exchange, shall be as follows:
- For trading members, the gross open position across all contracts should not exceed 15% of the total open interest or USD 1 billion equivalent, whichever is higher.
- For Institutional Investors the Gross open position across all contracts not to exceed 15% of the total open interest or USD 1 billion equivalent, whichever is higher
- For other clients, the gross open position across all contracts will be 6% of the total open interest or USD 100 million equivalent, whichever is higher.
Further, the Stock exchanges shall impose appropriate penalties for violation of position limits by eligible market participants
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