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What is the open interest limit?
The term ‘open interest limit’ denotes the highest number of open contracts or positions that market participants are allowed to maintain for a specific financial instrument.
A restriction applies on a per-client basis, limiting them to 5% of the total number of all derivative contracts for the same underlying asset, while trading members (brokers) are subject to a 15% limit on open interest.
Serving as a regulatory safeguard, it prevents the accumulation of excessive positions by a single person or a trading member, thereby preserving market stability and mitigating potential risks.
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