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Business News/ Markets / Stock Markets/  NSE to impose additional exposure margin on some F&O stocks after expiry of April contracts
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NSE to impose additional exposure margin on some F&O stocks after expiry of April contracts

‘Scrips will be identified under this framework based on three months rolling data and will be reviewed on a monthly basis,' said NSE in its circular.

NSE will impose additional exposure margin on some F&O stocks after expiry of April contracts. Aniruddha Chowdhury/MintPremium
NSE will impose additional exposure margin on some F&O stocks after expiry of April contracts. Aniruddha Chowdhury/Mint

The National Stock Exchange (NSE) announced on Tuesday, April 16 that it will impose additional exposure margin on some of the Futures & Options (F&O) stocks. The framework will be effective from April 26, 2024 -- immediately after the expiry of April 2024 contracts. 

In a circular, the stock exchange platform said that the additional exposure margin at 15 per cent in equity derivatives segment will be levied on securities in which top 10 clients account for more than 20 per cent of MWPL.

‘’Additional exposure margin @15 per cent in equity derivatives segment shall be levied on securities in which top 10 clients account for more than 20 per cent of MWPL. However, for securities wherein additional surveillance margin is applicable, the higher of additional exposure margin as stated above or additional surveillance margin shall be levied,'' said NSE in its circular.

Also Read: Stock market today: Bandhan Bank, Exide Industries, GNFC among 11 stocks under F&O ban list on Tuesday — April 16

The market Wide Position Limit (MWPL) is the maximum number of open F&O contracts permitted for a particular underlying stock. This limit is set by the stock exchange. So it is the maximum permitted open interest (OI) for a particular underlying stock. It is expressed as a number of shares.

The NSE circular also said that for the securities wherein additional surveillance margin is applicable, the higher of additional exposure margin as stated above or additional surveillance margin will be levied. ‘’Scrips will be identified under this framework based on three months rolling data and will be reviewed on a monthly basis,'' said NSE in its circular. This framework shall be effective from April 26, 2024, immediately after the expiry of April 2024 contracts, it added.

At the end of each day the stock exchange disseminates the aggregate OI across all exchanges in the F&O on individual scrips along with the market wide position limit for that scrip and tests whether the aggregate open interest for any scrip exceeds 95 per cent of the MWPL for that scrip, as per NSE. The normal trading in the scrip is resumed only after the aggregate open interest across the stock exchanges comes down to 80 per cent or below of the MWPL.

 

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ABOUT THE AUTHOR
Nikita Prasad
Nikita covers business news and has been producing news on digital platforms since 2018. She writes on economy, policy, markets, commodities, industry. Her core areas of interests include infrastructure, energy, oil and gas, railways, and transport/mobility. She has worked for business news channels like Moneycontrol, NDTV Profit, and Financial Express in the past. If you have story ideas/pitches/reports or quotes/views to share, reach her at nikita.prasad@htdigital.in.
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Published: 16 Apr 2024, 09:55 PM IST
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