Description

Modification to additional margin requirements for Gold and Silver commodity derivatives contracts, with removal of 1% margin for November 2025 expiring contracts entering tender period and continuation for December 2025 contracts.

Summary

Indian Clearing Corporation Limited (ICCL) has issued a modification to circular 20251022-1 regarding additional margin requirements in Gold and Silver commodity derivatives contracts. The circular removes the 1% additional margin on November 2025 expiring contracts (GOLD and GOLDM) once they enter tender period from October 30, 2025, while maintaining the 1% additional margin on December 2025 contracts. Similar treatment applies to Silver contracts entering tender period.

Key Points

  • 1% additional margin on GOLD and GOLDM November 2025 contracts will be removed from Beginning of Day (BOD) October 30, 2025
  • 1% additional margin will be levied on GOLD and GOLDM December 2025 contracts from BOD October 30, 2025
  • Additional margins on expiring Silver contracts will be removed upon entering tender period and applied to next expiring contracts
  • ‘Near Month’ is defined as near month contract expiry not in Tender Period for this circular’s purposes
  • This circular modifies the earlier ICCL circular no. 20251022-1 dated October 22, 2025

Regulatory Changes

The margin framework for commodity derivatives has been adjusted to distinguish between contracts in tender period versus those approaching expiry. Contracts entering tender period will have additional margins removed, while the next near-month contracts will have margins applied. This represents a dynamic margin adjustment mechanism tied to contract lifecycle phases.

Compliance Requirements

  • All Members/Participants must note the margin changes effective from October 30, 2025
  • Clearing Members must ensure adequate collateral for positions in December 2025 Gold contracts subject to the 1% additional margin
  • Members must adjust their risk management and position sizing to account for the margin schedule changes
  • Compliance with ICCL Rules, Bye-laws, and Regulations regarding margin requirements

Important Dates

  • October 29, 2025: Circular issue date (Notice No 20251029-28)
  • October 30, 2025 (BOD): Removal of 1% additional margin on GOLD and GOLDM November 2025 contracts
  • October 30, 2025 (BOD): Application of 1% additional margin on GOLD and GOLDM December 2025 contracts
  • November 5, 2025: Expiry date for GOLD and GOLDM contracts exiting additional margin requirement
  • December 5, 2025: Expiry date for GOLD and GOLDM contracts subject to continued 1% additional margin

Impact Assessment

Market Impact: Medium - affects position costs and liquidity for traders rolling over Gold and Silver positions from November to December contracts. The 1% margin differential may influence roll-over timing decisions and near-month contract participation.

Operational Impact: Members trading commodity derivatives must adjust margin calculations and collateral management systems to reflect the revised schedule. The dynamic nature of margins tied to tender period entry requires operational awareness of contract phases.

Risk Management: The measure aims to mitigate systemic risk through periodic review of risk adequacy, particularly around contract expiry and physical delivery periods. The removal of margins during tender period may facilitate smoother settlement for those intending physical delivery.

Impact Justification

Modifies margin requirements for commodity derivatives traders in gold and silver contracts, affecting position costs and risk management for members trading near-month contracts during tender period transitions