Description

BSE revises minimum initial margin and short option minimum margin for all variants of gold and silver commodity derivative contracts effective October 14, 2025.

Summary

BSE has revised the minimum initial margin (IM) and Short Option Minimum Margin (SOMM) for all variants of gold and silver commodity derivative contracts. Gold contracts will have 7% minimum initial margin while silver contracts will have 11.50% minimum initial margin. The changes modify previous circulars from August 2, 2025 and September 9, 2025, and become effective from October 14, 2025.

Key Points

  • Gold contracts: Minimum Initial Margin increased to 7%, SOMM set at 7%
  • Silver contracts: Minimum Initial Margin increased to 11.50%, SOMM set at 11.50%
  • Gold contracts: MPOR of 2 days, VSR of 4%
  • Silver contracts: MPOR of 3 days, VSR of 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 ICCL Circular No 20250802-1 and ICCL Circular No 20250909-5

Regulatory Changes

The circular revises margin parameters for commodity derivatives:

Gold (all variants):

  • Minimum Initial Margin: 7%
  • Short Option Minimum Margin (SOMM): 7%
  • Applicable MPOR: 2 days
  • Applicable VSR: 4%

Silver (all variants):

  • Minimum Initial Margin: 11.50%
  • Short Option Minimum Margin (SOMM): 11.50%
  • Applicable MPOR: 3 days
  • Applicable VSR: 6%

The initial margin calculation methodology requires using 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 gold and silver commodity derivative contracts must comply with the revised margin requirements
  • Members must ensure adequate capital and margin deposits to meet the increased initial margin requirements
  • Risk management systems must be updated to reflect the new margin parameters
  • Participants should adjust their trading strategies and position limits according to the revised capital requirements

Important Dates

  • Circular Issue Date: October 13, 2025
  • Effective Date: October 14, 2025 (Begin of Day)
  • Supersedes: ICCL Circular No 20250802-1 (dated August 02, 2025) and ICCL Circular No 20250909-5 (dated September 09, 2025)

Impact Assessment

This revision significantly impacts commodity derivatives market participants:

Capital Impact: Members and participants will need higher margin deposits to maintain existing positions in gold and silver contracts, potentially reducing available trading capital.

Trading Costs: Increased margin requirements translate to higher cost of carry for positions, particularly for leveraged traders and hedgers.

Risk Management: Higher margins provide additional buffer for market volatility but may reduce market liquidity as some participants adjust position sizes.

Market Participants: All traders in gold and silver commodity derivatives - including hedgers, speculators, and arbitrageurs - will face increased capital requirements that may affect trading volumes and market depth.

Contact Information: Risk Department at risk.monitoring@icclindia.com or +91-22-2272 5186/8902 for queries.

Impact Justification

Significant increase in margin requirements for gold and silver contracts will directly impact capital requirements and trading costs for all market participants in commodity derivatives segment.