Description

Updated position limits for derivatives trading including MWPL, client limits, proprietary limits, TM limits, FPI and MF limits across multiple securities.

Summary

NSE has published updated position limits for the Futures & Options segment covering Market Wide Position Limits (MWPL) and category-specific limits for various participant types. The circular provides comprehensive position limit data for 42+ securities including limits for clients, proprietary trading, trading members, FPIs (Category I and II), and mutual funds.

Key Points

  • Market Wide Position Limits (MWPL) specified for each security in number of shares
  • Separate position limits defined for client accounts and proprietary trading accounts
  • Combined limits provided for Trading Members (Client + Proprietary), FPI Category I, and Mutual Funds
  • FPI Category II limits split between institutional entities and individuals/family offices/corporates
  • FPI Category II (institutional) limits are higher than FPI Category II (individuals/family offices/corporates)
  • Covers major index constituents and actively traded F&O stocks across sectors
  • Highest MWPL of 592 million shares for CIPLA, followed by 535.77 million for BEL
  • Banking sector stocks like AXISBANK (296.37M), BAJFINANCE (317.52M), CANBK (504.31M) have substantial position limits

Regulatory Changes

This circular provides updated position limit parameters that market participants must adhere to while trading in the F&O segment. The limits are structured to ensure:

  • Risk management and prevention of concentration of positions
  • Differentiated limits based on participant category and risk profile
  • Lower limits for individual/retail-focused FPI entities compared to institutional FPIs
  • Trading Member combined limits (Client + Proprietary) aligned with FPI Category I and MF limits

Compliance Requirements

  • Trading members must ensure client positions do not exceed specified client limits
  • Proprietary desks must monitor positions against proprietary limits (typically 2x client limits)
  • Combined TM positions (client + proprietary) must stay within specified TM limits
  • FPI Category I and Mutual Funds must adhere to the combined TM/FPI/MF limit column
  • FPI Category II entities must comply with category-specific limits based on entity type
  • Position monitoring required on real-time basis to prevent limit breaches
  • Brokers responsible for pre-trade and post-trade position limit checks

Important Dates

  • Circular Date: December 22, 2025
  • Effective Date: Immediate (limits applicable for ongoing trading)

Impact Assessment

Market Impact: High - These limits directly affect trading capacity and strategies for all F&O participants. Large institutional traders and proprietary desks must structure their positions within these constraints.

Operational Impact: Trading members must update risk management systems with latest limit parameters. Position monitoring systems need to be configured with the updated limits to prevent inadvertent breaches.

Strategic Impact: Traders with large positions may need to adjust strategies if current holdings approach or exceed new limits. FPI Category II entities (individuals/family offices) face tighter restrictions compared to institutional FPIs, affecting their market access.

Liquidity Impact: Position limits can affect market depth and liquidity, particularly for stocks with lower MWPL values where fewer participants can hold significant positions.

Impact Justification

Critical reference document for F&O traders, brokers, FPIs and mutual funds defining maximum permissible positions across client, proprietary, and institutional categories for 42+ actively traded securities