Revision in Daily Price Limits (DPL) for Commodity Futures Contracts

Last updated: 12 January 2021

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The Securities and Exchange Board of India (SEBI) has revised the Daily Price Limits (DPL) for commodity futures contracts, excluding index futures and options. These revised norms aim to balance price discovery with investor protection against extreme price movements. The changes, effective from April 1, 2021, introduce new slab structures for both agricultural and non-agricultural commodities, including specific rules for energy, metals, and precious metals.

Securities and Exchange Board of India CIRCULAR SEBI/HO/CDMRD/DNPMP/CIR/P/2021/9 11thJanuary, 2021 The Managing Directors / Chief Executive Officers All Recognized Stock Exchanges and Clearing Corporations having Commodity Derivatives Segment Dear Sir / Madam, Sub: Revision in Daily Price Limits (DPL) for Commodity Futures Contracts 1. The Daily Price Limits in commodity futures market serve an important function of defining the maximum range within which the price of a co

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FAQ :

Daily Price Limits define the maximum price range a commodity futures contract can move within a single trading session. They protect investors from sudden, extreme price fluctuations and allow for a cooling-off period to reassess market information.

The revised norms for Daily Price Limits (DPL) for commodity futures contracts will come into effect from April 1, 2021.

For agricultural and agri-processed goods, DPLs are linked to their classification as 'broad', 'narrow', or 'sensitive'. The revised slabs include an initial slab, an enhanced slab applied after a 15-minute cooling-off period if the initial limit is breached, and an aggregate DPL.

Non-agricultural goods have different DPL slabs based on categories like Energy, Metals and Alloys, Precious Metals, Gems and Stone, and Other Non-agricultural goods. These also include an initial slab, an enhanced slab after a 15-minute cooling-off period, and an aggregate DPL, with some categories allowing trading beyond the aggregate DPL.

For the first trading day, the base price is determined using the Volume Weighted Average Price (VWAP) of the first half-hour of trading (minimum ten trades), or the first hour (minimum ten trades) if insufficient trades occur, or the VWAP of the first ten trades if trading is limited.

Notification No : SEBI/HO/CDMRD/DNPMP/CIR/P/2021/9
Source : https://www.sebi.gov.in/legal/circulars/jan-2021/revision-in-daily-price-limits-dpl-for-commodity-futures-contracts_48720.html

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