"Securities Under Ban" What does this mean? Can we trade in intrady equity and F&O in these scrips which are banned?
For any security if its derivative contracts crosses 95% of Market wide position limits (MWPL) then that security will be under ban for F&O.It means the combined open interest of all option and future contracts for all the months taken together for that particular underlying crosses 95% of MWPL.
Once a stock is under ban, one can trade in that particular contract only to offset his/her existing position but not allowed to open or add a new contract, simply saying one can not take a trade which increases open interest.
The stock comes out of ban only if its aggregated open interest comes down to 80% or below of MWPL.
MWPL is expressed in number of shares, it is lower of
1) 30 times average number of shares traded daily,during the previous calendar month,in the cash segment.
2) 20% of number of shares held by non promoters i.e 20% of the free float,in terms of number of shares of company.
Exchange release MWPL data for each stock traded in derivative segment on a monthly basis.
So, one is not restricted to trade in any manner under equity segment.
if security in a ban period, then it is not allowed to buy.
so to offset the position, you need to sell the security.
when there is no buy/bids then how will the order be matched for offsetting the position.?
Generally there will be bids/offers unless they are far OTM option contracts. Anyhow if there is no liquidity you can place your limit order and hope some buyer will complete the trade.
The security will move to ban when it crosses above 95% of market capitalization in the F&O segment. If security is moved to ban then there will be other members who would like to exit the positions, you will find bid & ask in the security.
The question araised because, when there is a ban of an equity, then it is not allowed to place a buy order by the broker.( correct me, if my understanding is incorrect.) Hence i was under the impression that there will not be any bids to buy.
The bids you mentioned is the buy order provided by the exchange or the clients?
Exchange never provides any bids/offers, other clients only will offer liquidity.
Can we do intraday in fno ban period …
Some brokers may allow, some may not.
Fno is good for , if you want to take positions more than a day, for intraday, its better to trade in cash segment of same share, you want to trade in,
In ban period, you can’t take new position of long or short sell, but people who already have positions, can put up bids to liquidate, for buy or sell
Do zerodha allow intraday trade in future of the ban scrip ?
Sir, I need your help on a query. assume I have Open Long Futures Positions of a stock well before that script goes into ban. My query is: “Should I Compulsorily exit that position on that day of Ban? Or I shall continue to hold TILL EXPIRY?”
During ban period one cannot take fresh positions in F&O contracts of that security. You can square-off your position anytime you want to.
Is there a way to calculate for a particular stock when the open interest is near to MWPL?
@suri Yes, there are sites which provide live MWPL data. You can find the securities nearing the MWPL limit using these sites.