NSE to implement risk reduction mode for currency derivatives

Country's premier stock exchange NSE has decided to implement the risk reduction mode for its currency derivative segment from February 10.
According to NSE, members would be "compulsorily" placed in risk reduction mode when 95 per cent of the member's capital is utilised towards margins.
The risk reduction mode is already in place for the cash and equity derivative segment on NSE.
"To enhance the risk management capabilities of the members and to avoid a situation of disablements, member shall be compulsorily placed in risk reduction mode when 95 per cent of the member's capital is utilised towards margins," the exchange said.

The stock broker would be moved back to the normal risk management mode as and when the collateral of the stock broker was lower than 90 per cent utilisation level.
Under this mode, all outstanding orders would be cancelled when 95 per cent of the stock broker's collateral available for adjustment against margins gets utilised.
When a member moves to risk reduction mode, fresh orders placed by trading member to reduce open positions will be accepted.
Besides, these fresh orders will be checked for sufficiency of margins and those which do not satisfy the criteria will be rejected.