SEBI Proposes Higher Client Position Limits For Agricultural Commodity Derivatives

The Securities and Exchange Board of India (SEBI) has proposed increasing client position limits for agricultural commodity derivatives while revising the penalty framework for breaches of those limits.

Position limits cap the number of contracts a trader can hold in a commodity at any given time. SEBI said these limits are meant to curb excessive speculation, prevent concentration of positions in the hands of a few participants, and reduce systemic risk.

At present, agricultural commodities are classified as Broad, Narrow, and Sensitive categories, with client position limits set at 1%, 0.5% and 0.25% of deliverable supply, respectively.

SEBI has proposed doubling these limits. If implemented, the client position limit for Broad commodities would rise to 2% of deliverable supply, for Narrow commodities to 1%, and for Sensitive commodities to 0.5%.

The regulator has also proposed changing the criteria for classifying a commodity as “Broad.” Currently, a commodity must meet both quantitative and monetary thresholds to fall in this category. SEBI has proposed that meeting either one would be sufficient.

Separately, SEBI has proposed changes to penalties for breaches of position limits, including a cap of ₹20 lakh for larger violations and additional penalties for repeated breaches.

The regulator has invited public comments on the proposals until June 2, 2026.