Position limits in Index Futures

Customer level

• No position limit. Disclosure to exchange, if position of people acting in concert is 15% or more of open interest.

Trading member level

• 15% of open interest or 100 crore whichever is higher.
• to be reviewed after 6 months of futures trading.

Clearing member level

• No separate position limit. However, C.M. should ensure that his own positions (if C.M. is a T.M. also) and the positions of the T.Ms. clearing through him are within the limits specified above for T.M.

Market level

• No limit. To be reviewed after 6 months of trading in futures.

Expected advantages of derivatives to the cash market

• Higher liquidity

• Availability of risk management products attracts more investors to the cash market.
• Arbitrage between cash and futures markets fetches additional business to cash market.

• Improvement in delivery based business.
• Lesser volatility
• Improved price discovery.

What makes a contract click

• Risk in the underlying market.
• Presence of both hedgers and speculators in the system.
• Right product specifications.
• Proper margining.

Future

• Multiple indices trading on the same exchange even the same index with different contract designs
• Dedicated funds -
  
  • Future funds
  • Options funds
  • Hybrid funds

    
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