MWPL NSE Ban List

Knowledge Session

When the open interest (OI) on a stock exceeds 95% of the market-wide position limits, or MWPL, the futures and options contracts for that stock go into a ban period. Its prohibition is only lifted if the open interest drops to less than 80%.

How to Calculate MWPL

The Market-Wide Position Limit (MWPL) is calculated for a derivative instrument to ensure that the overall exposure to that instrument remains within permissible limits. Here's how it is generally calculated:

• Free Float Shares: The number of shares available for trading in the public market (excludes shares held by promoters, government, or other locked-in shares).
• Applicable Multiplier: NSE sets this at 20% of the total free float shares for most instruments but may vary depending on the exchange's policies.

Example Calculation

Assume the following details for a stock:

• Total Shares Outstanding: 1,000,000
• Promoter & Locked-in Holdings: 400,000
• Free Float Shares: 1,000,000 - 400,000 = 600,000
• Applicable Multiplier: 20% of Free Float Shares.

The MWPL can be calculated as:

      MWPL = Free Float Shares × Applicable Multiplier
      MWPL = 600,000 × 20% = 120,000 shares
    

This means that the MWPL for the stock is 120,000 shares, which sets the limit for futures and options contracts on the stock.

Further Explanation

The MWPL helps ensure that the total exposure to a stock in the market remains within a safe and controlled limit. When the open interest on a stock exceeds 95% of this MWPL, trading of its futures and options is prohibited. Once the open interest falls below 80% of MWPL, the ban is lifted, and trading can resume.