Sebi ups margins, cuts position limits for currency segment

Changes to be effective from July 11

The Securities and Exchange Board of India (Sebi) has increased the minimum amount of money that traders have to provide upfront and reduced the upper limit on the size of their positions in the currency derivatives segment. 

The moves are effective from July 11. 

“In consultation with RBI (Reserve Bank of India) and in view of the recent turbulent phase of extreme volatility in USD-INR exchange rate, it has been decided to curtail position limits and increase margin requirements for Currency Derivatives…” said the circular. 

The margins have been doubled. Meanwhile, the gross open position of a trader across all contracts have been capped at 6% of the total open interest or 10 million dollars, according to a Sebi circular dated July 8th. 

An open position is a contract which is yet to be squared off.

The number for a trading member who is not a bank has been capped at 15 per cent and 50 million dollars. 

Those watching the segment suggest that it is largely aimed at protecting domestic currency traders rather than curbing rupee speculation, which is more of a global phenomenon. 

The exchange rate of the rupee against the dollar crossed Rs.61 mark on Monday, an all-time low.