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,
| Particulars | Calculation |
|---|---|
| Total share capital of company ABC | 1,00,000 shares |
| % of Promoter holdings | 40% |
| No. of shares held by Promoters | 40,000 shares |
| No. of shares with Non-Promoters (free-float) | 60,000 shares |
| MWPL % | 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.
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