Description
BSE revises minimum initial margin and SOMM requirements for all variants of Gold and Silver commodity derivative contracts, effective October 14, 2025.
Summary
BSE Indian Clearing Corporation Limited (ICCL) has revised the minimum initial margin and Short Option Minimum Margin (SOMM) requirements for all variants of Gold and Silver commodity derivative contracts. This circular modifies previous circulars from August 2, 2025 and September 9, 2025. Gold contracts will require 7% minimum initial margin, while Silver contracts will require 11.50% minimum initial margin. The changes take effect from beginning of day on October 14, 2025.
Key Points
- Gold contracts: Minimum Initial Margin increased to 7%, SOMM at 7%
- Silver contracts: Minimum Initial Margin increased to 11.50%, SOMM at 11.50%
- Gold contracts: MPOR set at 2 days, VSR at 4%
- Silver contracts: MPOR set at 3 days, VSR at 6%
- Initial margin calculated as higher of minimum initial margin or VaR scaled by MPOR
- Applies to all variants of Gold and Silver contracts
- Modifies previous circulars dated August 2, 2025 and September 9, 2025
Regulatory Changes
Revised Margin Parameters:
| Commodity | Minimum Initial Margin (%) | Short Option Minimum Margin % (SOMM) | Applicable MPOR | Applicable VSR (%) |
|---|---|---|---|---|
| Gold (all variants) | 7 | 7 | 2 | 4 |
| Silver (all variants) | 11.50 | 11.50 | 3 | 6 |
Margin Calculation Method: The initial margin shall be the higher of:
- The minimum initial margin (7% for Gold, 11.50% for Silver), OR
- The Value at Risk (VaR) scaled up by Margin Period of Risk (MPOR)
Compliance Requirements
- All members and participants trading Gold and Silver commodity derivatives must maintain the revised minimum initial margin levels
- Members must ensure adequate capital and margin funds are available to meet the increased margin requirements
- Risk management systems should be updated to reflect the new margin parameters
- Position limits may need to be reviewed in light of increased margin requirements
- Contact Risk Department at risk.monitoring@icclindia.com or +91-22-2272 5186/8902 for queries
Important Dates
- Circular Issue Date: October 13, 2025
- Effective Date: October 14, 2025 (Begin of Day)
- Supersedes: ICCL Circular No 20250802-1 (August 2, 2025) and ICCL Circular No 20250909-5 (September 9, 2025)
Impact Assessment
Market Impact:
- Higher margin requirements will increase capital costs for traders in precious metals
- May reduce speculative trading activity in Gold and Silver contracts
- Could lead to position reductions by traders with limited capital
- Liquidity in Gold and Silver contracts may be affected in the short term
Operational Impact:
- Members need to ensure sufficient funds in margin accounts before October 14, 2025
- Trading strategies and position sizing will need adjustment for the higher margin environment
- Particularly significant impact on Silver contracts with 11.50% margin requirement
- Risk management frameworks must be updated to incorporate new MPOR and VSR parameters
Risk Mitigation: The increased margins are designed to strengthen risk management in volatile precious metals markets and protect market integrity during periods of high volatility.
Impact Justification
Significant increase in margin requirements for precious metals trading will directly impact capital requirements and position limits for all members trading gold and silver contracts