SEBI prescribes stock exchanges to implement a mechanism of Dynamic Price Bands so as to prevent acceptance of orders placed beyond the price limits set by the stock exchanges. These dynamic price bands are applicable to all currency futures positions including the cross currency futures contracts
Dynamic price bands for Contracts with tenure up to 6 months - ? 3% of the theoretical price or the previous day closing price
Dynamic price bands for Contracts with tenure greater than 6 months - ? 5% of the theoretical price or the previous day closing price
The exchanges relax the dynamic price bands in increments of 1% as and when a market-wide trend is observed.
Clearing means computing open positions and obligations of clearing members in the trading system.
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