Daily Price Limits (DPL) define the maximum range within which the price of a commodity futures contract can move during a trading session. These limits protect investors from sudden and extreme price movements and provide a cooling off period to re-evaluate information and fundamentals affecting the price of the commodity futures contract.
Indian stock exchanges have informed that the closing price in the domestic market differs from the closing price in the international markets, after the necessary currency conversion, due to a difference in the methodology of calculating the closing price, said the Securities and Exchange Board of India (Sebi) in a circular. .
Due to these differences in closing prices, the overall DPL range in the domestic market may lag (up or down) the prices in the international market in the next trading session.
To solve the problem, Sebi said that in case the price movement in the international markets is above the global DPL, or if the international price is beyond the global DPL range (after appropriate currency conversion) compared at the previous day’s closing price on the national exchange. , the same maybe further eased in 3 percent steps by trading with a cooling off period of 15 minutes.
In such cases, the national stock exchanges will have to give an appropriate notice to the market with all the relevant details and the justification thereof.
“Only in exceptional circumstances, where there is extreme price movement, beyond the initial DPL tranche, in international markets, during trading hours or after the close of trading on domestic exchanges, that exchanges can relax the DPL directly to the required level, by giving appropriate notice to the market,” Sebi said.
The regulator has instructed national exchanges to notify Sebi of all such instances of DPL easing in the monthly development report.
The new framework will come into effect with immediate effect, the regulator said.
Daily Price Limits (DPL) define the maximum range within which the price of a commodity futures contract can move during a trading session. These limits protect investors from sudden and extreme price movements and provide a cooling off period to re-evaluate information and fundamentals affecting the price of the commodity futures contract.
Indian stock exchanges have informed that the closing price in the domestic market differs from the closing price in the international markets, after the necessary currency conversion, due to a difference in the methodology of calculating the closing price, said the Securities and Exchange Board of India (Sebi) in a circular. .
Due to these differences in closing prices, the overall DPL range in the domestic market may lag (up or down) the prices in the international market in the next trading session.
To solve the problem, Sebi said that in case the price movement in the international markets is above the global DPL, or if the international price is beyond the global DPL range (after appropriate currency conversion) compared at the previous day’s closing price on the national exchange. , the same maybe further eased in 3 percent steps by trading with a cooling off period of 15 minutes.
In such cases, the national stock exchanges will have to give an appropriate notice to the market with all the relevant details and the justification thereof.
“Only in exceptional circumstances, where there is extreme price movement, beyond the initial DPL tranche, in international markets, during trading hours or after the close of trading on domestic exchanges, that exchanges can relax the DPL directly to the required level, by giving appropriate notice to the market,” Sebi said.
The regulator has instructed national exchanges to notify Sebi of all such instances of DPL easing in the monthly development report.
The new framework will come into effect with immediate effect, the regulator said.