More Stories

Informist, Tuesday, May 12, 2026

 

MUMBAI – The Securities and Exchange Board of India, in a consultation paper issued Tuesday, proposed to raise the position limits for clients in the commodity derivatives segments and also increased the upper limit on the penalty levied for violation of position limits. The regulator has invited comments from market participants on the same by Jun. 2. 

 

SEBI puts agricultural commodities into three categories—-broad, narrow, and sensitive, and proposed to double the position limit for these categories to 2%, 1%, and 0.5% of the deliverable supply, respectively. The paper has also proposed raising the penalty for violations of more than 2% of the prescribed limit to up to INR 200,000. Earlier, violations of over 2% of the prescribed limit had a lower penalty threshold of INR 10,000. The capping of penalties in commodity derivatives may help in creating a "context-sensitive, inclusive, and risk aligned" ecosystem.

 

Position limits are regulatory caps on the number of contracts that a trader can hold in a specific commodity at any given time. These limits aim to curb excessive speculation, prevent excessive concentration of positions with a few participants, and mitigate the systemic risks from such concentrated exposures in commodity derivatives.

 

The paper also recommended modifying the definition of the 'broad' category. An agricultural commodity will now be classified as a 'broad commodity' if it is not a 'sensitive commodity' and its average deliverable supply for the last five years is at least 1 million tonnes, or INR 50 billion. This has been proposed as bourses said very few commodities were able to meet both of the current criteria, that it should not be a 'sensitive commodity' and the average deliverable supply for the last five years should be at least 1 million tonnes and INR 50 billion.

 

An agricultural commodity is classified as a 'sensitive commodity' if it is prone to frequent government or external interventions such as stock limits, import or export restrictions, or frequent instances of price manipulation in the last five years of derivatives trading. A 'narrow commodity' is one which does not fall in either of the other categories.

 

Further, the paper proposed that commodities which shift to 'broad' from 'narrow' shall initially retain a position limit of 1% for a year. Thereafter, the exchange may raise the position limit of such commodities to 2%.  End

 

Reported by Ashutosh Pati

Edited by Tanima Banerjee

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.