//ask those who were witness to the meltdown of 2008...there were many big names whose Terminals were switched off by the exchanges.//
do the exchanges really stop us from benefiting (or losing) from major crashes... this is the first time i am coming to know....i am just a 18 months old as a trader!
It's not exchange stop you to make money from crash, it's about margins you and your broker with exchange. There are position limits for individual client and broker+ client, if broker's limit (means the size of position he & his clients can create) exceed first then even if you have money in account you will not able to create new position. typically position limits are around 15%.
Here is more info
http://www.nseindia.com/products/content/derivatives/equities/position_limits.htm
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Index Futures
The trading member position limits in equity index futures contracts is higher of Rs.500 crores or 15% of the total open interest in the market in equity index futures contracts. This limit is be applicable on open positions in all futures contracts on a particular underlying index.
Index Options
The trading member position limits in equity index option contracts is higher of Rs.500 crores or 15% of the total open interest in the market in equity index option contracts. This limit would be applicable on open positions in all option contracts on a particular underlying index
Futures and Option contracts on individual securities:
The trading member-wise position limit in futures and options in individual stocks is related to the market-wide position limit for the individual stocks.
For stocks having applicable market-wide position limit (MWPL) of Rs. 500 crores or more, the combined futures and options position limit is 20% of applicable MWPL or Rs. 300 crores, whichever is lower and within which stock futures position cannot exceed 10% of applicable MWPL or Rs. 150 crores, whichever is lower.
For stocks having applicable market-wide position limit (MWPL) less than Rs. 500 crores, the combined futures and options position limit is 20% of applicable MWPL and futures position cannot exceed 20% of applicable MWPL or Rs. 50 crore which ever is lower.
Client Level Position Limits
The gross open position for each client, across all the derivative contracts on a underlying, should not exceed:
-1% of the free float market capitalization (in terms of number of shares)
or
- 5% of the open interest in all derivative contracts in the same underlying stock (in terms of number of shares)
whichever is higher
Client level position limits underlying-wise, are available to members on NSE's website.
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