The National Stock Exchange (NSE) placed four stocks in the futures & options (F&O) ban list for February 14. The stocks are Tata Power Ltd, Bharat Heavy Electricals Ltd (BHEL), Steel Authority of India Ltd (SAIL) and Punjab National Bank (PNB).
The derivative contracts of the four stocks had breached the 95 percent limit on the market-wide position, and therefore they were put under the ban, according to the stock exchange.
NSE had put BHEL and PNB in the F&O ban list on Friday. The bourse updates the list of stocks in the derivatives ban list on a daily basis.
EXPLAINED
When a stock is put in the F&O ban list, no fresh positions are permitted in it. Stock exchanges such as NSE set the market-wide position limit or MWPL, which defines the maximum number of open interest contracts allowed at a time. The F&O ban comes into force if the limit is breached.
"All clients/members shall trade in the derivative contracts of said securities only to decrease their positions through offsetting positions... Any increase in open positions shall attract appropriate penal and disciplinary action," NSE said.
NSE disseminates the aggregate open interest across exchanges in the F&O segment on stocks along with the market wide position limits. It checks whether the aggregate open interest for any scrip exceeds 95 percent of the market wide position limit for that scrip.
Once the ban is in place, only a cut in positions is allowed till the scrip is shifted back to normal trading. Normal trading is resumed only after the aggregate open interest across bourses comes below 80 percent or the market wide position limit.
(Edited by : Sandeep Singh)
First Published: Feb 14, 2022 10:42 AM IST
