Description

BSE consolidates penalty framework for trading limit violations (RRM) and position limit violations across equity, currency derivatives, and securities lending segments.

Summary

BSE has issued a consolidated summary of penalties applicable for trading limit violations (RRM violations) and position limit violations across multiple segments including Equity Cash, Equity Derivatives, Currency Derivatives, and Securities Lending & Borrowing. The circular standardizes penalty structures with escalating charges based on frequency of violations within a calendar month, ranging from 0.07% per day for first instances to cumulative penalties plus referral to Member Committee from the 11th instance onwards.

Key Points

  • Trading limit violations attract 0.07% per day penalty plus additional fixed charges based on violation frequency
  • Penalty structure differentiates between violations ≤ Rs 1 crore and > Rs 1 crore
  • From 11th instance onwards, violating members are referred to Member Committee for suitable action
  • Position limit violations for Equity Derivatives: 1% of violation value (min Rs 5,000, max Rs 1,00,000 per entity per stock per day)
  • Currency Derivatives position limit violations: no penalty for 1st instance, escalating penalties for subsequent violations
  • Client-level position limit violations in Currency Derivatives: Rs 5,000 per violation per client per day
  • Penalties collected from clearing members who may recover amounts from violating clients
  • Ban period position violations attract 1% of violation value with specified minimum and maximum limits

Regulatory Changes

This is a consolidation circular providing a unified summary of existing penalty frameworks. No new regulatory changes are introduced; the circular serves as an informational reference for members.

Compliance Requirements

  • Trading members must ensure compliance with trading limits (RRM) across all segments
  • Position limits must be monitored at trading member, FPI, mutual fund, and client levels
  • Clearing members are responsible for penalty payment and may recover from violating clients
  • Members must maintain vigilance to avoid multiple violations leading to Member Committee referral
  • Specific monitoring required for ban period positions to avoid enhanced penalties

Important Dates

  • Notice Date: October 24, 2025
  • Effective Date: Immediate (consolidation of existing penalty structures)

Impact Assessment

Market Impact: Low - This is a consolidation circular that does not change existing penalty structures or introduce new regulations.

Operational Impact: Medium for trading and clearing members - Provides clear reference framework for penalty calculations, enabling better risk management and violation tracking. Members can now easily reference consolidated penalty structures across segments rather than referring to multiple circulars.

Financial Impact: Members with repeated violations face escalating penalties and potential Member Committee action from 11th instance onwards. Clearing members bear initial penalty liability with recovery rights from violating clients.

Impact Justification

Informational circular consolidating existing penalty structures for limit violations; impacts trading members and clearing members but does not introduce new penalties