| 6.1 Customer Level
The group agreed that though position limits make most sense conceptually
when imposed at the customer level, it is not practical to enforce such
a requirement unless
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The aggregate position of a customer who operates through several brokers
can be determined by the use of a single customer code (for example the
Income Tax permanent account number). Currently, each broker assigns a
code to a customer independently so the customer has as many codes as the
number of brokers through whom he operates.
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A customer operating under multiple names and through multiple shell companies
can be identified as a single customer using an operationalizable definition
of "acting in concert".
Instead of recommending position limits at the client level, the group
recommends a self-disclosure requirement similar to that in the take-over
regulations:
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Any person or persons acting in concert who together own 15% or more of
the open interest shall be required to report this fact to the exchange
and failure to do so shall attract a penalty as laid down by the exchange
/ clearing corporation / SEBI.
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This requirement may not be monitored by the exchange on a real time basis,
but if during any investigation or otherwise, any violation is proved,
penalties can be levied.
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This would not mean a ban on large open positions but only a disclosure
requirement.
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