What is 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. 

It is the lower of:
30 times the average number of shares traded daily during the previous calendar month in the cash segment, OR
20% of the number of shares held by non-promoters, i.e., 20% of the free float, in terms of the number of shares of the company.

For example,

Total share capital of company ABC
% of Promoter holdings
No. of shares held by Promoters40,000 shares
No. of shares with Non-Promoters
20% of non-promoter holdings 
Market Wide Position (in shares)
60,000 * 20% = 12,000 shares

F&O Ban: 

At the end of the trade day, if the Open Interest (OI) of F&O contracts of ABC's stock exceeds 95% of its market-wide position of 12,000 shares (i.e., OI exceeds 11,400), F&O contracts of ABC stock will be put under a ban period. 

Visit NSE and BSE's website to see which contracts are currently on the ban list. 

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