Trading by Mutual Funds in Exchange Traded Derivative Contracts

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..... followed from the recommendations of the Committee on Derivatives chaired by Dr. L. C. Gupta. Since then there have been several changes in the structure of the cash market and the volumes in the derivatives market have increased manifold. It is also observed that there has been a significant increase in retail participation in the derivatives market. 2. Following the recommendations of the Secondary Market Advisory Committee, based on the above considerations, it has been decided to permit the Mutual Funds to participate in the derivatives market at par with Foreign Institutional Investors (FII). Accordingly, the Mutual Funds shall be treated at par with a registered FII in respect of position limits in index futures, index options, stoc .....

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..... tual Fund position limit in all index options contracts on a particular underlying index shall be ₹ 250 crore or 15% of the total open interest of the market in index options, whichever is higher, per Stock Exchange. b. This limit would be applicable on open positions in all options contracts on a particular underlying index. ii. Position limit for Mutual Funds in index futures contracts: a. The Mutual Fund position limit in all index futures contracts on a particular underlying index shall be ₹ 250 crore or 15% of the total open interest of the market in index futures, whichever is higher, per Stock Exchange. b. This limit would be applicable on open positions in all futures contracts on a particular underlying index. .....

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..... ock futures contracts, the gross open position across all derivative contracts on a particular underlying stock of a scheme of a mutual fund shall not exceed the higher of: 1% of the free float market capitalisation (in terms of number of shares). Or 5% of the open interest in the derivative contracts on a particular underlying stock (in terms of number of contracts). 2. This position limits shall be applicable on the combined position in all derivative contracts on an underlying stock at a Stock Exchange. 3. For index based contracts, Mutual Funds shall disclose the total open interest held by its scheme or all schemes put together in a particular underlying index, if such open interest equals to or exceeds 15% of the open intere .....

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