Sebi tweaks ex­po­sure lim­its for bro­kers

Financial Chronicle - - COMPANIES -

SEBI on Wed­nes­day mod­i­fied open in­ter­est lim­its for bank and non-bank stock bro­kers in cur­rency de­riv­a­tive con­tracts.

Be­sides, the mar­kets reg­u­la­tor has asked stock ex­changes to have a uni­form method­ol­ogy for com­put­ing and mon­i­tor­ing pro­pri­etary po­si­tion lim­its in the cur­rency con­tracts.

In cur­rency de­riv­a­tives par­lance, open in­ter­est gen­er­ally refers to po­si­tions taken by a bro­ker that are yet to be closed.

Stock bro­kers —bank as well as non-bank — should en­sure all pro­pri­etary po­si­tions cre­ated in FCY-INR pairs are within the re­vised con­sol­i­dated lim­its, ac­cord­ing to a Sebi cir­cu­lar.

USD-INR, EUR-INR, GBP-INR and JPY-INR are among the cur­rency de­riv­a­tive pairs or FCY-INR.

With re­spect to bank stock­bro­kers, the sin­gle INR limit for pro­pri­etary po­si­tion will be the higher of the 15 per cent to­tal open in­ter­est across all FCY-INR pairs or up to $200 mil­lion, the cir­cu­lar said.

In the case of non-bank stock bro­kers, the same will be ap­pli­ca­ble ex­cept for the over­all limit be­ing capped at $100 mil­lion. “Stock ex­changes, in con­sul­ta­tion with each other, shall im­ple­ment a uni­form method­ol­ogy for com­put­ing and mon­i­tor­ing... of pro­pri­etary po­si­tion lim­its in INR,” the cir­cu­lar said.

The ru­pee move­ment has been volatile in re­cent weeks amid un­cer­tain global cues. Stock ex­changes and clear­ing cor­po­ra­tions have to seek Sebi’s ap­proval for launch­ing cross-cur­rency de­riv­a­tives prod­ucts.

“Such pro­posal shall, in­ter-alia, in­clude the de­tails of con­tract spec­i­fi­ca­tions, risk man­age­ment frame­work, sur­veil­lance sys­tems, and other re­quire­ments,” the cir­cu­lar said.

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