What does the position limit system mean?
The position limit system means that the exchange determines the maximum speculative positions that members or customers can hold in a contract according to the regulations of the exchange in order to prevent the manipulation of market prices and the excessive concentration of futures market risks on a few investors.
The implementation of the position limit system can be conveniently carried out with the help of the customer number in the investor trading code. As we all know, although the same investor can open an account in different members and thus have multiple transaction codes, his customer number should be the same in different transaction codes. Therefore, even if the same customer opens positions in different members, he can still summarize his positions according to his customer number. When the investor's position reaches or exceeds the position limit, it will not be allowed to open positions in the same direction, that is, it is not allowed to open new positions when the long position exceeds the limit, and it is not allowed to open new positions when the short position exceeds the limit; Moreover, before the end of the first quarter of the next trading day, investors must close their positions to meet the requirements of the position limit, otherwise they will be forced to close their positions.
The main purpose of implementing the position limit system is to prevent the manipulation of market prices and the excessive concentration of market risks on a few investors.
The position limits of customers and members are as follows:
(1) Speculative trading customer number. The limit of unilateral positions in the contract is 100 lots. The customer number positions of hedging and arbitrage transactions shall be implemented in accordance with the relevant regulations of the Exchange, and are not limited by the 100 lot position limit.
(2) If the total unilateral position of a contract exceeds 6,543,800 lots after settlement, the unilateral position of the settlement member in the next trading day shall not exceed 25% of the total unilateral position of the contract.
For members or customers who really need to use stock index futures for hedging, they can apply for hedging quota according to the relevant requirements in the hedging management measures of the exchange to avoid the position restrictions.