What does the position limit mean? What should I do if the position limit is exceeded?

In the futures trading market, there are still a lot of investors. What does the position limit mean? What should I do if the limit is exceeded? Will there be any penalties? Let’s quickly find out.

What does position limit mean?

Position limit has relevant regulations. According to the regulations of the trading market, it limits the number of underlying assets held by investors entering the market. In the futures market, there is a relevant limit system that stipulates the maximum amount of a product held by a customer or member and unilaterally calculates the speculative position of a certain product.

The CFFEX stipulates the position limits for customers and members according to stock index futures contracts as follows:

Implement absolute position limits, and the unilateral position limit for customers in a certain contract is 600 contracts. ;

Absolute position limits are implemented. For self-operated trading members, the unilateral position limit for a certain contract is 600 contracts;

For those with a total position exceeding 100,000 contracts For a certain contract's unilateral quantity, a member's unilateral position cannot exceed one quarter, that is, 25%.

There are also investors who are not subject to the above regulations. Customers and members who have been approved for naughty hedging quota are not restricted. If the position limit is reached or exceeded, member clients cannot open positions in the same direction.

For ordinary investors, for copper futures, the position limit on the last trading day from the listing to the delivery month is 8,000, the first month before the delivery month is 3,000, and the delivery month is 1,000 .

What should investors do if their position limit is exceeded?

What should they do if their position limit is exceeded?

The exchange has regulations. When the limit is exceeded, there will be At the close of the day, the futures company member where the investor is located will be notified by the exchange and required to close the position on its own. If the position is not closed during the first trading period of the second trading day, the exchange will force the position to be closed. , and the account's position opening authority is still limited. In principle, the position opening time is limited to more than one month.

It is recommended that investors who exceed the limit should complete the position closing within the prescribed time to avoid the embarrassing situation of restricted trading authority and affect subsequent transactions. At the same time, if the position is forced to be liquidated, it is likely to be recorded on the blacklist, affecting personal integrity.

So, exceeding the position limit is actually similar to the temporary limit of a credit card. If it expires and is not applied for within the specified time period, or it is frequently opened and closed, especially for hedging purposes. Investors need to open or close a position, otherwise, there will be forced liquidation and they will have to bear certain consequences.

I hope this introduction to the position limit will be helpful to everyone. If there are relevant position regulations, you still need to pay more attention when buying to avoid unnecessary risks to yourself in the future.

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