Description

ICCL increases minimum initial margin requirements for gold contracts to 7% and silver contracts to 11.50%, effective October 14, 2025.

Summary

The 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 from August 2, 2025 and September 9, 2025. The changes mandate higher capital requirements for members and participants trading these commodities, with gold margins set at 7% and silver margins at 11.50%.

Key Points

  • Minimum Initial Margin for Gold (all variants) increased to 7%
  • Minimum Initial Margin for Silver (all variants) increased to 11.50%
  • Short Option Minimum Margin (SOMM) for Gold set at 7%
  • Short Option Minimum Margin (SOMM) for Silver set at 11.50%
  • Margin Period of Risk (MPOR) for Gold set at 2 days
  • Margin Period of Risk (MPOR) for Silver set at 3 days
  • Volatility Scan Range (VSR) for Gold set at 4%
  • Volatility Scan Range (VSR) for Silver set at 6%
  • Initial margin will be the higher of: minimum initial margin OR VaR scaled up by MPOR

Regulatory Changes

This circular modifies ICCL Circular No 20250802-1 dated August 02, 2025 and ICCL Circular No 20250909-5 dated September 09, 2025. The revised margin framework applies uniformly across all variants of gold and silver contracts traded on the commodity derivatives segment.

Compliance Requirements

  • All members and participants must ensure adequate capital allocation to meet the revised margin requirements
  • Trading systems must be configured to calculate margins using the higher of: (a) minimum initial margin, or (b) VaR scaled up by MPOR
  • Risk management systems should be updated to reflect the new MPOR and VSR parameters
  • Members must have sufficient collateral available before the effective date

Important Dates

  • Circular Date: October 13, 2025
  • Effective Date: October 14, 2025 (Begin of Day)

Impact Assessment

The increased margin requirements will have significant capital implications for all members and participants trading gold and silver commodity derivatives. Members will need to maintain higher collateral levels, which may reduce leverage and affect trading strategies. The higher margins for silver (11.50%) compared to gold (7%) reflect the greater volatility in silver markets. Market participants should review their positions and ensure adequate funding before the October 14, 2025 effective date to avoid margin shortfalls or forced liquidations.

Impact Justification

Significant increase in margin requirements for commodity derivatives will directly impact capital requirements for all members trading gold and silver contracts, requiring immediate action before October 14, 2025.