There’s been a revision to the quantity freeze limit for index futures and options contracts on NSE. The latest quantity freeze limit (mentioned below) will come into effect from 01-11-2022.
|Index Ticker||Quantity Freeze Limit|
A ‘quantity freeze limit’ is the maximum number of contracts a trader can buy or sell in one order. These limits exist so that exchanges can manage and control risk in a prudent manner.
Revisions to the limits are published from time to time based on market conditions again, to ensure that exchanges can manage risk better.
Now, you may wonder what might happen if you place an order that exceeds the quantity freeze limit. To put it simply, it will be rejected. There’s a solid reason behind this.
Let’s say a trader has clumsy thumbs and instead of shorting 1,000 contracts, they end up shorting 10,000 contracts. This can put the trader, the broker, and the exchange at risk.
Another example is that of institutions which can afford to purchase thousands of derivative contracts and subsequently derail the market. That’s why the limit exists and any order that exceeds it will be automatically blocked by the exchange.
If you’re using Dhan, you don’t need to worry about the quantity freeze limit because of our awesome feature - Iceberg/Slice Order.
On Dhan, if you enter an order that exceeds the quantity freeze limit, it will be automatically sliced into multiple legs so that you don’t have to worry about order rejections.
This is just one way in which we’re building a product to make the life of traders and investors easier. Stay tuned because we’re going to announce something big soon