NSE puts RBL Bank under F&O ban for Monday

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The National Stock Exchange has decided to ban this first stock, in April series, from trading in the futures and options segment after RBI Bank crossed 95 percent of the market-wide position limit.

Private sector lender RBL Bank is the first addition to the ban list in the current series. The stock was down 10 percent in last four consecutive sessions but the loss was much higher, at 41 percent, in last five months from Rs 217.25 till Rs 128.1 on last Friday.

If the derivative contracts in securities crossed 95 percent of the market-wide position limit, then they are on the ban list, the NSE said.

“All clients/members shall trade in the derivative contracts of said security only to decrease their positions through offsetting positions. Any increase in open positions shall attract appropriate penal and disciplinary action,” the NSE said.

During the ban, traders are not allowed to take fresh positions in stocks under the F&O ban, but they can start reducing their positions. The F&O ban rule helps reduce speculation in a stock.

The market-wide position limit, which is set by the stock exchanges, is the maximum number of outstanding open positions (buy and sell) in the F&O contracts of a security. If the open interest in a stock crosses 95 percent of the market wide position limit, then its F&O contracts enter the ban period.

Normal trading in a security resumes only after the aggregate open interest across exchanges comes down to 80 percent or below the market-wide position limit, the NSE said.