NISM Certifications · NISM-Series-VIII: Equity Derivatives · Legal and Regulatory Environment
Which of the following is true about position limits and disclosure for stock derivatives in India?
SEBI and exchanges impose position limits on clients, trading members and market-wide open interest to prevent excessive speculation and manipulation. These limits apply regardless of margin payment and are not limited to FPIs or waived near expiry.
- APosition limits apply only to FPIs and never to clients or members
- BExchanges and SEBI impose position limits on members, clients and entities to curb excessive speculationCorrect
- CPosition limits are removed once a contract nears expiry
- DThere are no limits as long as margins are paid
Explanation
Position limits at client, member and market-wide levels are used to restrict concentration and manipulation, regardless of margin payment. They do not disappear near expiry and are not confined to FPIs.
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