Sebi tightens agri futures norms

The Securities and Exchange Board of India (Sebi) on Friday imposed further restrictions on agri-commodities futures. Two weeks ago, the commodity market regulator had restricted open positions in near-month contracts. Now, more restrictions on position limits have been announced with effect from March 1. The latest move follows suspension of castor-seed futures by the National Commodity and Derivatives Exchange on Wednesday.

Client-level position limit (no client should have more than five per cent of the open market position) is now discontinued. The near-month position limit for a particular commodity would now be restricted to one-fourth of the overall client-level position limit in that commodity.

For the purpose of calculating the overall position, all long and short positions of the client across all contracts will be added up separately and the higher of the two will be considered the overall open position. For calculating the near-month open position, the higher of long and short positions of the client in the near month contracts will be considered.

From now on, netting out near-month contract with offsetting positions in far-month contracts would not be permitted for the purpose of computation of near-month position of any client.

According to Sebi, proprietary positions of the member will also be treated as client’s position for calculating above limits.

Netting will not be considered for calculating member level positions as well. All long and short positions will be added up separately and the higher of the two will be reckoned, Sebi said.