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SEBI Circular on "Position Limits in Interest Rate Derivatives (IRD)"

Circular No. SEBI/HO/MRD/CIR/P/2019/103 dated September 26, 2019 addressed to all Recognized Stock Exchanges and all Recognized Clearing Corporations.—

SEBI vide circulars CIR/MRD/DRMNP/35/2013 dated December 5, 2013, CIR/MRD/DRMNP/ 2/2014 dated January 20, 2014 and CIR/MRD/DRMNP/11/2015 dated June 12, 2015 prescribed framework for trading of Cash settled Interest Rate Derivatives (IRD) on Stock Exchanges.

2. Based on the consultations held with stock exchanges, it has been decided to review the extant position limits in Interest Rate Derivatives as under:

 (i) Banks and Primary Dealers dealing as clients shall have same position limits as are applicable to Trading Members.

 (ii) Institutions belonging to Category I and II FPIs (i.e. other than individuals, family offices and companies) shall have same position limits as are applicable to Trading Members, whereas non-institutions belonging to Category II FPI (i.e. individuals, family offices and companies) shall have same position limits as are applicable to clients.

 (iii) Position limits have been revised for Interest Rate Derivatives falling in 8-11 years residual maturity bucket. The revised position limits for all the buckets shall be as under:

Position Limits in Interest Rate Derivatives (IRD)

3. The provisions of this circular shall come into force with immediate effect.

4. This circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act 1992, read with Section 10 of the Securities Contracts (Regulation) Act, 1956 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

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