Brokers limit at particular strike price in F&O?

[ShubhS9]

@PK123

a) Wrt options, is this limit applicable at individual strike level or on overall OI for NIFTY CE for a particular expiry. Say 20k strike NIFTY CE (Aug 2023 expiry) has 1,00,000 OI and total OI for NIFTY CE (Aug 2023 expiry) is 30,00,000. So if someone is trading 20k NIFTY CE, will the restriction be calculated as 5% of 1,00,000 or 5% of 30,00,000 (since restriction considers all derivative contract with “same underlying”, the underlying is NIFTY index here and the strike price is immaterial to the wordings mentioned in the rule)?

The limit is applicable on overall OI of all derivative contracts of that underlying, this will include Calls, Puts as well as Futures.

For example: if Call option XYZ has an OI of 100,000, the Put option has OI of 50,000, and the Futures contract has OI of 200,000. The the total OI is 350,000, the 5% client-wise OI limit is applicable on this.

@PK123

b) Does Zerodha’s RMS check for this 5% rule at individual level / 15% rule at broker level when orders are punched in by user? If the trade results in a OI exposure above 5% / 15%, will the order get automatically rejected?

The client-level OI limit is calculated at the PAN level by Clearing Corporation. If the 5% OI limit is breached, the Clearing Corporation will notify the broker, and after that broker will notify the client asking to reduce the position. If the position isn’t reduced by the client then it is reduced by the RMS.