Description

NSE Clearing discontinues interim penalty procedure for position increases during ban period effective December 6, 2025, reverting to standard penalty provisions outlined in September 2025 circular.

Summary

NSE Clearing Limited has announced the discontinuation of the interim penalty procedure for increases in positions during the ban period, effective December 6, 2025. The circular notifies members that the standard penalty levy mechanism outlined in the September 8, 2025 circular (NCL/CMPT/70085) will be reinstated after the interim procedure ends.

Key Points

  • Interim penalty procedure introduced via circular 0129/2025 (September 30, 2025) will be discontinued from December 6, 2025
  • Standard penalty provisions from circular 119/2025 (September 8, 2025) will apply after discontinuation
  • Penalties relate to increases in positions during ban period for equity derivatives
  • Standard operating procedure covers Market-Wide Position Limit (MWPL) monitoring and entity-level position monitoring during ban periods
  • Change applies to all trading members in the Futures and Options segment

Regulatory Changes

The circular marks the end of a transitional/interim period for penalty enforcement. Members must comply with the original framework established in September 2025, specifically:

  • SOP for monitoring MWPL from ban period perspective
  • Entity-level monitoring of positions during ban period
  • Standard penalty levy mechanism as per Annexure 1 of circular NCL/CMPT/70085

Compliance Requirements

  • Trading members must ensure compliance with standard penalty provisions from December 6, 2025
  • Members should review the provisions outlined in NCL Circular 119/2025 (NCL/CMPT/70085) dated September 8, 2025
  • Particular attention required to Annexure 1, Point 2 regarding SOP for MWPL and ban period monitoring
  • Risk management systems must be aligned with standard penalty framework

Important Dates

  • November 27, 2025: Circular issued
  • December 6, 2025: Interim penalty procedure discontinues; standard penalty provisions become effective

Impact Assessment

Market Impact: Medium - affects derivatives trading members who may increase positions in securities under ban period. The reversion to standard procedures provides clarity and consistency in penalty enforcement.

Operational Impact: Trading members need to ensure their risk monitoring and compliance systems are configured for the standard penalty framework rather than interim provisions. Members who increased positions during ban periods under the interim arrangement must prepare for the stricter standard penalty regime.

Risk Management: Enhances risk monitoring by implementing the full standard operating procedure for MWPL and entity-level position tracking during ban periods, as originally intended in the September 2025 framework.

Impact Justification

Procedural change affecting derivatives trading members who increase positions during ban periods; reverting to standard penalty framework after interim period