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Mumbai: Capital markets regulator Sebi on Friday allowed bank stock brokers to have a greater exposure in the currency derivatives market as compared to the limits permitted for the non-bank stock brokers.
The gross open position limit for all brokers currently stands at up to 15% of the total open interest or $100 million (nearly Rs 673.5 crore), whichever is higher.
“However, for bank stock brokers, as authorised by the Reserve Bank of India (RBI), the gross open position across all contracts shall not exceed 15% of the total open interest or 1 billion (nearly Rs 6,735 crore), whichever is higher,” Sebi said in a circular.
The move is aimed at maintaining orderly conditions in the domestic foreign exchange market and the decision is based on the recommendation from RBI, Sebi said. The RBI will keep Sebi and the stock exchanges informed about the bank stock brokers that are authorised to have enhanced position limits.
In April last year, Sebi had raised the transaction limit in Exchange Traded Currency Derivatives (ETCD) to $15 million (nearly Rs 101.03 crore) from $10 million (nearly Rs 67.35 crore) previously for both foreign and domestic investors without having any underlying exposure. The requirement of an underlying exposure had been placed to check speculation in the currency market.