Description
BSE revises minimum initial margin requirements for gold and silver commodity derivative contracts effective October 14, 2025.
Summary
Indian Clearing Corporation Limited (ICCL) has revised the minimum initial margin and Short Option Minimum Margin (SOMM) parameters for all variants of gold and silver commodity derivative contracts. This circular modifies previous circulars dated August 02, 2025 and September 09, 2025. The revised margins will be effective from October 14, 2025.
Key Points
- Gold contracts: Minimum Initial Margin increased to 7% and SOMM to 7%
- Silver contracts: Minimum Initial Margin increased to 11.50% and SOMM to 11.50%
- Gold contracts: MPOR (Margin Period of Risk) set at 2 days, VSR (Volatility Scan Range) at 4%
- Silver contracts: MPOR set at 3 days, VSR at 6%
- Initial margin will be higher of: minimum initial margin OR VaR scaled up by MPOR
- Changes apply to all variants of gold and silver contracts
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 |
The initial margin calculation methodology requires taking the higher value between:
- The minimum initial margin percentage, or
- The Value at Risk (VaR) scaled up by the Margin Period of Risk (MPOR)
Compliance Requirements
- All members and participants trading in commodity derivatives segment must comply with revised margin requirements
- Trading systems must be updated to reflect new margin parameters
- Members should ensure adequate collateral/margin deposits to meet increased requirements
- Risk management systems should be calibrated for new parameters before October 14, 2025
Important Dates
- Notice Date: October 13, 2025
- Effective Date: October 14, 2025 (Begin of Day)
- Previous Circulars Modified: ICCL Circular No 20250802-1 (August 02, 2025) and ICCL Circular No 20250909-5 (September 09, 2025)
Impact Assessment
Market Impact
- Increased margin requirements may reduce leverage available to traders in gold and silver contracts
- Higher margins could lead to reduced trading volumes initially as participants adjust positions
- Enhanced risk protection for the clearing corporation and market participants
Operational Impact
- Members need to arrange additional funds to meet higher margin requirements
- Potential adjustment in trading strategies due to increased capital requirements
- Silver contracts face more significant margin increase (11.50%) compared to gold (7%)
Risk Management Impact
- Improved risk coverage for volatile precious metal contracts
- Better protection against default risk during the margin period of risk
- Alignment with market volatility patterns in precious metals segment
Contact: Risk Department, Email: risk.monitoring@icclindia.com, Phone: +91-22-2272 5186/8902
Impact Justification
Margin requirement changes directly affect trading members and participants in commodity derivatives segment but are routine risk management adjustments