Markets regulator Sebi today fixed position limit for brokers and institutional investors, operating in international financial services centres (IFSCs), for cross-currency futures and options contracts.
Position limit refers to the highest number of options or futures contracts an investor is allowed to hold on one underlying security.
In a circular, Sebi said that "gross open position across all contracts not to exceed 15 per cent of the total open interest or USD 1 billion equivalent, whichever is higher", for trading members, institutional investors and eligible foreign investors.
For other clients, open position across all contracts should not exceed 6 per cent of the total open interest or USD 100 million equivalent, whichever is higher.
The stock exchanges would impose penalties for violation of position limits by these market participants.
Trading in currency derivatives has been allowed on stock exchanges operating in IFSC.
The cross-currency futures and options contracts are available for trading in various pairs. A currency future is a contract to exchange one currency for another at a specified date at exchange rate that is fixed on the purchase date.
Sebi had in March 2015 issued a detailed set of guidelines for establishing IFSCs as part of efforts for setting-up financial hubs in the country. The first such centre has been set up in Gujarat's Gift City.