In Indian F&O markets, individual securities are subject to position limits defined by the market-wide position limit (MWPL). This limit is expressed as a percentage of the security’s freely tradable stock and aims to prevent excessive speculation and maintain market stability.

At the close of each trading day, the exchange aggregates the open interest across all exchanges for each security’s futures and options contracts. This open interest is then compared to the corresponding MWPL. If the open interest for any security exceeds 95% of its MWPL, that security enters a ban period.

During the ban period, new futures and options positions on the affected security are prohibited. Existing positions, however, can be closed or reduced through offsetting transactions. This temporary restriction on fresh positions allows the open interest to decline and facilitates a return to normal market conditions. Normal trading resumes once the aggregate open interest across all exchanges falls below 80% of the MWPL for the designated security.

Note: There is no MWPL for index futures and options contracts.