NSE to impose additional exposure margin on some F&O stocks

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The National Stock Exchange (NSE) on Tuesday (April 16) said it will impose additional exposure margin on some Futures & Options (F&O) stocks.

“Additional exposure margin @15% in equity derivatives segment shall be levied on securities in which top 10 clients account for more than 20% of
Market Wide Position Limit (MWPL),” NSE said in a circular.

However, for securities wherein an additional surveillance margin is applicable, the higher additional exposure margin as stated above or additional surveillance margin shall be levied.

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“Scrip’s shall be identified under this framework based on 3 months rolling data and shall be reviewed on a monthly basis,” NSE added. This framework will be effective from April 26, 2024, immediately after the expiry of April 2024 contracts.

What is MWPL?

MWPL is the maximum position that can be taken in the derivatives segment, both futures and options contracts combined. This number is linked to the trading volume in the cash market or free-float (non-promoter shares) in the company.

At present, MWPL is the lower of 30 times the average number of shares traded daily in the cash segment, during the previous month, or 20% of the shares held by non-promoters. This means that if the public shareholding in a company totals 100 shares, then the positions that can be taken up through futures and options contracts should not exceed 20 shares.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow