In some not so good news for commodity traders, the margins required to trade commodity derivatives are set to go up soon (implementation date yet to be announced). Check this circular from MCX.
Margins will increase by up to a whopping 80%. See below, an estimate on how much margins will go up by.
Margin required - currently
Margins post circular
Margin required (CME, Nymex, etc)
Crude
9.72%
11.25%
6.30%
GOLD
5.25%
7.25%
3.18%
Silver
7.25%
9.25%
6.30%
Copper
5.65%
9.25%
4.10%
Zinc
6.24%
11.25%
5.70%
Cotton
5.25%
9.25%
4.30%
The margin required for the same contract on international exchanges (CME, Nymex, etc) is significantly lesser. Even if we had to factor in the currency (rupee) risk, this new margin requirement seems like overkill. We are taking this up with the exchanges.
If you are trading commodities, you’d have to be prepared for the margin going up, it can happen anytime.
@nithin it will be good to see how the margins compare with US when hedged option margin reduction comes in. As per prior articles in news the reduction is expected to bring the margin requirement in line with global exchanges but a cross comparison with various exchanges (specially SGX) will definitely help throw some light on where we will stand once the new reform kicks in …
cheers!
@nithin this SEBI is increasing margin every segment , how we can do trade , if SEBI want to live excchange in india or not , i think SEBI itself will sold the NSE,BSE,MCX , really its diffcult for us , where we can bring more money every time when they are increasing the margin , As ZERODHA you also not allowing to pledge debt and equity mutual fund , our major investment in mutual fund only ,
Even Hedged margin also not implemented as a trader we are affected heavily , we are forced to find other country exchange to trade , even this brainless regulator let allowed us to trade derivatives in USA market , even here also they are not allowing us to trade in derivatives , outside also not allowing to trade , who are the hell , i really to be shamed to do a business in this country , india is not business friendy country , those govt people are telling lie , even FII knows
@siva Lets SEBI and RBI go to hell with those circular , these RBI and sebi cannot control a fraud in company like karvy , pnb , these regulator trying to control Retail trader , lets go to hell rbi and sebi , its shame for them
The E mini S&P which is the most traded index derivative in USA and has margin requirement of 4%, comparatively for Nifty it is around 12%. There are Micro index derivative contracts as well and here we have SEBI on a spree to remove the mini contracts and increase margins all in the name of protecting retail investors.
The US has a good penetration of over 50% of population participating in Financial markets but in India it is 2.5% and all these draconian measures will only discourage market participants. What is SEBI set out to achieve?
but if we get a trading contract through proprietory funds companies like topstep trader,helios trading partners etc…then we can trade in forex and CME and NYMEX right?
You can’t trade in it, minimum investment in AIF is 1 cr, if someone want to invest in AIF they can directly reach out to them, these are not for retailers.
