Besides, schemes of mutual funds can also have position limits as applicable to the clients currently.
Trading in IRF is cash settled and is based on the benchmark ten-year government bond, one of the most liquid debt paper instruments in the country.
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The clarifications were given by the Securities and Exchange Board of India (Sebi) in a circular today "in light of the queries received" by it on the issue.
"Mutual Funds shall have position limits as applicable to trading members presently," Sebi said.
"Schemes of mutual funds shall have position limits as applicable to clients presently," it added.
Presently, the gross open positions of the trading members across all contracts cannot exceed 10 per cent of the total open interest or Rs 600 crore, whichever is higher.
For clients, the gross open positions across all contracts cannot exceed 3 per cent of the total open interest or Rs 200 crore, whichever is higher.
An IRF is a contract between a buyer and a seller for future delivery of an interest-bearing security such as government bonds.
The product provides market participants with a better option to hedge against risks arising from fluctuations in interest rates.
Market participants like banks, FIIs, insurance companies, corporate houses and NBFCs can also trade in this product.