For Thursday, the NSE has placed Indiabulls Housing Finance under a F&O ban

The National Stock Exchange has barred Indiabulls Housing Finance from trading in the futures and options section for Thursday, May 12, after the stock breached 95 percent of the market-wide position limit the day before.

On the bourses on May 11, Indiabulls Housing Finance was the largest loser, sliding 20.5 percent to settle at Rs 111.15, the lowest level since April 2020. The stock has dropped 58 percent in the last five months.

Indiabulls Housing Finance said in a filing to exchanges on May 11 that its Asset Liability Management Committee (ALCO) has resolved to make an offer to NCD holders to buy them on the exchange at par in a negotiated deal with each individual NCD holder and keep them as treasury stock till maturity.

If any NCD holder wishes to sell their holdings on the exchange to the company in a negotiated transfer, they must “get in touch with corporate officials” by June 28, 2022 to complete the transaction, according to the company.

The NSE said derivative contracts in securities that exceeded 95 percent of the market-wide position limit were placed on the prohibition list.

“All clients/members shall trade in the said security’s derivative contracts exclusively to reduce their positions by offsetting positions.” The NSE stated that “any rise in open jobs will result in appropriate punitive and disciplinary action.”

Traders are not authorised to establish new stock positions during the ban, although they can begin to reduce their existing positions. The F&O ban rule serves to curb stock speculating.

The maximum number of outstanding open positions (buy and sell) in a security’s F&O contracts is the market-wide position limit, which is regulated by stock exchanges. F&O contracts in a stock enter the ban period when open interest exceeds 95% of the market-wide position limit.

The NSE stated that normal trading in a securities restarts only when the aggregate open interest across exchanges falls to 80% or below the market-wide position limit.