The Securities Exchange Board of India (SEBI) on May 12, 2026, issued the Consultation paper on review of position limits for clients and penalty provision for violation/breach of position limits for the Commodity Derivatives Segment.
The following has been stated:
• SEBI has proposed doubling the existing client-level position limits for agri commodity derivatives, increasing limits from 1% to 2% of deliverable supply for Broad commodities, from 0.5% to 1% for Narrow commodities, and from 0.25% to 0.5% for Sensitive commodities.
• The proposal also seeks to relax the definition of “Broad Commodity” by allowing classification if either the quantitative threshold of 10 lakh metric tonnes or the monetary threshold of ₹5,000 crore is satisfied, instead of requiring both conditions simultaneously. Commodities shifting from the Narrow to the Broad category would initially continue with a 1% limit for one year before being eligible for a further increase to 2% after review by the exchange.
• The consultation paper also proposes changes to the penalty framework for breaches of position limits in commodity derivatives. At present, penalties are linked to the extent and duration of the violation without any upper cap for larger breaches.
• SEBI has now proposed capping penalties for violations exceeding 2% of prescribed limits at ₹2 lakh or the calculated amount, whichever is lower, while violations up to 2% would continue to attract penalties up to ₹10,000. Exchanges would also be empowered to place repeated violators under square-off mode for one day and impose additional penalties for repeated breaches within a calendar month.
• Public comments on the proposals have been invited until June 02, 2026.
