Margin for commodity derivatives set to go up soon

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.


Sad… :frowning:

@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 …

well , i was expecting this from SEBI , So for the time being , i abandoned trading in Commodities!!

I traded commodities just for the sake of indulgence and after Crude Junior was laid in the grave, it pretty much closed all doors for me… Not that I don’t indulge in the crude options now and then but still raising the margin despite them being sky high is what I would call a F**** up move, nothing else… :joy:

How can we trade on CME / NYMEX etc …?

Hmm… you can’t. Indian’s aren’t allowed to trade derivatives internationally under FEMA

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Are AIF-3 allowed to take overseas positions.

Can check for FAQ from SEBI here.

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@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



I would like to ask a serious question.

Why is SEBI increasing margins? Does it foresee a huge risk in market.

What is SEBI seeing that market is not seeing?

Is SEBI preparing for a big crash in indian markets?

Because by increasing the margins, its sending a clear message to the world that indian markets are at a big risk.

What’s your take on this?

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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?

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so they will increase margin almost 40-70% and then tell brokers not to provide addtinonal intraday leverage also. :crazy_face::crazy_face::crazy_face:

Can you pls provide a few names of the AIFs Alternative Investment Funds available in india ?

I think if you google you should able to find few.

Are there any listed on the exchange ?

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?

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As per my knowledge none of the AIFs are listed on exchange, rules won’t allow them or pms to be listed on exchange.

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