--- title: "Why do F&O contracts enter ban period?" description: "A stock enters F&O ban when the total market exposure in that stock exceeds 95% of the Market Wide Position Limit (MWPL). The ban lifts when the…" category: arrow subcategory: trading-faqs slug: why-do-f-o-contracts-enter-ban-period canonical: https://support.arrow.trade/arrow/trading-faqs/why-do-f-o-contracts-enter-ban-period/ --- # Why do F&O contracts enter ban period? > A stock enters F&O ban when the total market exposure in that stock exceeds 95% of the Market Wide Position Limit (MWPL). The ban lifts when the… ## Short answer A stock enters F&O ban when the total market exposure in that stock exceeds 95% of the Market Wide Position Limit (MWPL). The ban lifts when the exposure falls below 80% of MWPL. This prevents excessive speculation and maintains market stability when too many positions build up in a stock. You can find the list of securities under the ban period on iRage's margin calculator. ## What is Market Wide Position Limit (MWPL)? MWPL is the maximum exposure allowed across all traders in a stock. Exchanges calculate this limit based on the stock's free float shares and trading volumes to ensure no single stock becomes over-leveraged. ## How do exchanges measure market exposure? Exchanges measure exposure using Future Equivalent (FutEq) open interest, which calculates the actual market impact of all positions. Different positions have different market impacts: 1 lot of Futures has full impact on the stock price 1 lot of deep in-the-money Call option has nearly the same impact as Futures 1 lot of out-of-the-money Call option has much less impact FutEq adjusts each position based on its delta (how much it behaves like the underlying stock) to measure the real market exposure. ## Example of FutEq calculation If you hold these positions in the same stock: 1 lot long Future = FutEq of +1 (full impact) 1 lot long Call with delta 0.5 = FutEq of +0.5 (half the impact of Futures) 1 lot long Put with delta –0.3 = FutEq of –0.3 (opposite direction, less impact) Your total FutEq = +1 +0.5 –0.3 = +1.2 This gives a more accurate picture of your actual market exposure than simply counting three contracts. ## What changed in the monitoring method? Earlier: Exchanges counted the total number of contracts (gross open interest) across all traders. Now: Exchanges calculate the total FutEq across all traders, which accounts for the actual market impact of each position. The new method provides a more realistic measure of risk since options with lower delta have less impact on the stock price than Futures. Did you know? The ban period does not apply to index F&O contracts. ## Related - Browse more in [trading faqs](/arrow/trading-faqs/) - Open account: [kyc.arrow.trade](https://kyc.arrow.trade) - Trade on Arrow: [app.arrow.trade](https://app.arrow.trade) - Support: [support@arrow.trade](mailto:support@arrow.trade) --- Source: https://support.arrow.trade/arrow/trading-faqs/why-do-f-o-contracts-enter-ban-period/ Publisher: Arrow / iRage Broking Services LLP