Investing F&O ban MWPL open interest position limit NSE

Why scrips enter the F&O ban

From WebNotes, a public knowledge base. Last updated 21 June 2026. Reading time ~12 min.

Key facts

Ban entry	Market-wide open interest crosses 95% of the market-wide position limit (MWPL)
Ban exit	Market-wide open interest falls below 80% of the MWPL
MWPL (revised)	The lower of 15% of free-float shares or 65 times the average daily delivery value of the stock in the cash market
MWPL (earlier rule)	20% of the free-float shareholding of the stock
Open-interest measure	Future-equivalent (delta-based) open interest, not raw contract count
Ban list published by	NSE and BSE at end of day for the next trading day; mirrored on the Zerodha margin calculator

A stock enters the F&O ban when the combined market-wide open interest in its futures and options crosses 95% of its market-wide position limit (MWPL), the cap on total open interest that the National Stock Exchange and BSE set for each derivative stock under SEBI’s position-limit framework. The stock leaves the ban once that open interest falls back below 80% of the MWPL. This article explains how the MWPL is calculated, why the 95% and 80% thresholds are set where they are, how the daily ban list is built and published, and what changed when the exchanges moved to a delta-based open-interest measure.

The ban itself is a set of trading restrictions: once a stock is on the list, only position-reducing trades are allowed, and fresh positions attract a daily penalty. Those restrictions are covered in detail in F&O ban period restrictions . This article is the upstream piece: why a stock lands on the list in the first place.

Conflict-of-interest disclosure. This article is published by the WebNotes Editorial Team for informational purposes and is written independently. WebNotes operates a Zerodha account-opening referral programme, disclosed on the pages that carry the referral link; this article does not carry it and earns no referral commission.

The market-wide position limit

Every stock that has listed derivatives carries a market-wide position limit, the maximum total open interest the exchange allows across all participants in that stock’s futures and options combined. The MWPL is a structural cap on concentration: it stops the entire derivatives float of one stock from being held in a way that would make an orderly expiry settlement hard.

Under the revised framework, the MWPL for a stock is the lower of two measures: 15% of the free-float shares of the stock, or 65 times the average daily delivery value of the stock in the cash market, where 65 days of delivery value represents roughly three months of cash-market trading. The earlier rule set the MWPL at a flat 20% of the free-float shareholding. The move from a single 20% measure to the lower of two measures tightened the cap, especially for stocks whose cash-market delivery is thin relative to their free float, because the 65-times-delivery measure binds first for those names.

Measure	Earlier rule	Revised rule
Basis	20% of free-float shares	Lower of 15% of free-float shares, or 65 times average daily delivery value
Effect	Single fixed cap	Tighter of two caps, binds on the thinner measure
Open-interest unit	Contract count	Future-equivalent (delta-based) open interest

Tying part of the MWPL to cash-market delivery anchors the derivatives cap to the stock’s real liquidity. A stock with heavy derivatives interest but thin underlying delivery hits the 65-times-delivery measure sooner, which is precisely the kind of name where a concentrated derivatives position would be hardest to settle.

Future-equivalent open interest

The exchanges no longer measure MWPL utilisation by counting contracts. They measure it in future-equivalent (FutEq), delta-based terms. A futures lot counts as one full unit of delta. An option lot counts at its option delta, so an at-the-money option contributes roughly half a unit, and a deep out-of-the-money option contributes a small fraction. This matters because the same number of option contracts can represent very different real directional exposure depending on how far in or out of the money they are.

Under the older contract-count method, a large book of cheap out-of-the-money options could push MWPL utilisation up sharply even though the real directional exposure was small. The delta-based measure fixes that distortion: a stock’s MWPL utilisation now tracks the net directional open interest the market actually holds, not the raw count of contracts. The practical result is that some stocks that would previously have hit the ban on a build-up of far OTM options now stay off the list, while a build-up of futures and near-the-money options moves utilisation faster.

The 95% and 80% thresholds

The ban does not trigger at 100% of the MWPL; it triggers at 95%. Once the combined market-wide open interest in a stock crosses 95% of its MWPL at any point during a trading session, the exchange places the stock in the ban for the whole of the next trading day. The 5% buffer below the hard cap means the restriction bites before the limit is actually breached, giving the market room to unwind without hitting the ceiling.

The exit threshold is lower than the entry threshold by design. A banned stock leaves the list only once its market-wide open interest falls below 80% of the MWPL. The 15-percentage-point gap between the 95% entry and 80% exit thresholds creates hysteresis: a stock that has just dipped below 95% does not immediately leave the ban, because that would let it bounce in and out on minor intraday swings. It must fall meaningfully, to below 80%, before the restriction lifts.

A stock can therefore sit in the ban for a single day, if open interest unwinds quickly once traders are forced to stop adding, or for an extended run across an expiry cycle if interest stays elevated. The ban is re-evaluated each day: the exchange checks the end-of-day MWPL utilisation and decides whether the stock stays banned, joins the ban, or comes off it for the next session.

How the daily ban list is built and published

The MWPL utilisation is monitored intraday and assessed at the close. At end of day, NSE and BSE each publish the list of stocks that will be in the ban for the next trading day, alongside the MWPL utilisation percentages for derivative stocks. A stock that crossed 95% during the day appears on the next day’s list; a banned stock whose utilisation has fallen below 80% drops off it.

For a Zerodha client, the most direct place to see the live picture is the Zerodha margin calculator , which shows the MWPL utilisation percentages and flags the stocks in the ban. Because the ban is declared for a whole trading day in advance, you can check the list the evening before and know which names are off-limits for fresh positions at the next open. The official NSE and BSE end-of-day files are the primary source; the broker page mirrors them for convenience.

What entering the ban changes for a trader

Once a stock is on the list, the trading restrictions in F&O ban period restrictions apply: only trades that reduce or maintain your net future-equivalent open interest are allowed, fresh or increasing positions attract a recurring exchange penalty of 1% of the increase (minimum Rs 5,000, maximum Rs 1,00,000 per day, plus 18% GST), and Zerodha blocks MIS on the banned stock. You keep the right to exit, so the ban never traps you into holding a position; it only stops you from adding to it or opening a new one.

The ban interacts with expiry mechanics in single-stock names. Stock futures and in-the-money stock options are physically settled on expiry, and the delivery-margin ramp in the expiry week runs whether or not the stock is banned. A stock that is both in the ban and approaching expiry restricts your ability to roll the position forward, because writing fresh options in the same name that increase net delta is a breach. Plan exits in banned names ahead of expiry week rather than relying on a roll.

Index derivatives are exempt

The MWPL and the ban apply only to single-stock derivatives. Index derivatives, such as Nifty and Bank Nifty futures and options, have no market-wide position limit in the MWPL sense and never appear on the ban list. Index contracts are subject to other controls, including client-level and exchange-level position limits, but not the 95%-of-MWPL ban that governs single stocks. This is why the ban list is always a list of company stocks, never an index.

External references

References

Zerodha Z-Connect, “Understanding the new delta-OI based MWPL framework”, zerodha.com (as of 21 June 2026): ban entry at 95% of MWPL, exit below 80%; MWPL revised to the lower of 15% of free float or 65 times average daily delivery value, against the earlier 20% of free float.
Zerodha Support, “Why do futures and option scrips enter the ban period?”, support.zerodha.com (as of 21 June 2026).
NSE, market-wide position limit and combined open interest monitoring, nseindia.com.
SEBI, framework on position limits and the market-wide position limit in the equity-derivatives segment, sebi.gov.in.

Frequently asked questions

Why does a stock enter the F&O ban?

It enters when the combined market-wide open interest in its futures and options crosses 95% of its market-wide position limit (MWPL). The ban is a concentration control that stops any single stock’s derivatives from absorbing too much open interest.

How does a stock exit the F&O ban?

It exits once the market-wide open interest falls below 80% of its MWPL. The gap between the 95% entry and 80% exit thresholds stops a stock from flickering in and out of the ban on small intraday moves.

What is the market-wide position limit (MWPL)?

The MWPL caps the total open interest possible in a stock’s derivatives. Under the revised rule it is the lower of 15% of the stock’s free-float shares or 65 times its average daily cash-market delivery value.

Is the ban based on contract count or delta?

On future-equivalent, delta-based open interest. A futures lot counts as one unit of delta; an option lot counts at its delta, so a deep out-of-the-money option adds far less to MWPL utilisation than a futures lot.

Where is the daily F&O ban list published?

NSE and BSE publish the next day’s ban list at the end of each trading session. Zerodha mirrors the list and the live MWPL utilisation percentages on its margin calculator page.

Do index derivatives like Nifty enter the ban?

No. The MWPL and the ban apply only to single-stock futures and options. Index derivatives such as Nifty and Bank Nifty have no MWPL and never appear on the ban list.

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WebNotes Editorial Team

The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

Last reviewed: 21 June 2026
Conflicts of interest: WebNotes is independent. No relationship with any broker, registrar or bank named in this article.