NSE to impose additional exposure margin on some F&O stocks

NSE to impose additional exposure margin on some F&O stocks

The National Stock Exchange (NSE) on April 16 said that it will impose additional exposure margin on some Futures & Options stocks. This framework shall be effective from April 26, 2024. immediately after the expiry of April 2024 contracts.

In a circular, the stock exchange platform said that additional exposure margin at 15 percent in equity derivatives segment shall be levied on securities in which top 10 clients account for more than 20 percent of Market Wide Position Limit (MWPL).

Market Wide Position Limit (MWPL) is the maximum number of open F&O contracts permitted for a particular underlying stock. This limit is set by the exchange. Hence, it is the maximum permitted OI for a particular underlying stock. It is expressed as a number of shares.

Exposure margin is collected over and above the span margin or the VaR margin–which is the minimum margin a trader has to pay to enter a position. Exposure margin is usually left to the discretion of the stock brokerage that would like additional protection from irregular market swings.

The NSE circular said that, for securities wherein additional surveillance margin is applicable, the higher of additional exposure margin as stated above or additional surveillance margin shall be levied, it said.

Scrips shall be identified under this framework based on three months rolling data and shall be reviewed on a monthly basis.