Description

ICCL introduces Concentration Additional Margin (CAM) from February 16, 2026 to mitigate concentration risk from large unhedged directional positions exceeding INR 1,000 crore.

Summary

Indian Clearing Corporation Limited (ICCL) announces the introduction of Concentration Additional Margin (CAM) in the Equity Derivatives Segment effective February 16, 2026. This measure implements SEBI’s risk management framework to mitigate concentration risk from exceptionally large, unhedged directional positions. CAM will be applicable in rare cases where Client or Proprietary Accounts have net directional notional open interest exceeding INR 1,000 crore at end-of-day, constituting more than 50% of total notional open interest for more than five trading days in a rolling ten-day period.

Key Points

  • CAM applies to net long or short positions exceeding INR 1,000 crore at T Day end-of-day
  • Trigger condition: Net directional exposure must constitute more than 50% of total notional open interest
  • Must persist for more than 5 trading days in a rolling 10 trading-day period
  • Applicable only for systemically important clearing members contributing high stress
  • Margin rates: 4% for INR 1,000-3,000 crore exposure, 5% for above INR 3,000 crore
  • CAM computed at EOD on T Day and blocked before T+1 Day trading commencement
  • Daily review mechanism with automatic release when trigger conditions not met
  • Based on SEBI Master Circular SEBI/HO/MRD-PoD2/CIR/P/2024/00181 dated December 30, 2024

Regulatory Changes

This circular implements SEBI’s consolidated risk management framework requiring additional margins for concentrated positions. The measure aligns with SEBI circular SEBI/HO/MRD/MRD-PoD-2/P/CIR/2024/131 dated October 01, 2024 regarding systemically important clearing members. CAM represents a new layer of margin requirements over and above existing margin obligations, specifically targeting concentration risk in equity derivatives.

Compliance Requirements

  • All Clearing Members, Trading Members, Custodians and Market Participants must comply
  • Members must ensure sufficient collateral availability to cover CAM obligations
  • CAM will be blocked from available collateral using ICCL’s collateral blocking mechanisms
  • Members will receive email intimation of applicable CAM obligations post-EOD on T Day or early on T+1 Day
  • Members should monitor their net directional exposures against the INR 1,000 crore threshold
  • Contact ICCL Risk Department for queries: Sushant Majhi (+91 9820218780), Sandeep Kadam (+91 8850083981), Vaibhav Jain (+91 9022771056), Vikram Purohit (+91 9819096175), Risk Team (+91 2272 5186/8615)

Important Dates

  • Circular Date: January 31, 2026
  • Effective Date: February 16, 2026
  • CAM Computation: End-of-day on T Day
  • CAM Blocking: Before commencement of trading on T+1 Day
  • Member Notification: Post-EOD on T Day or early on T+1 Day

Impact Assessment

High Impact on Large Position Holders: Members with concentrated unhedged derivative positions exceeding INR 1,000 crore will face significant additional capital requirements of 4-5% of notional exposure. This could affect trading strategies and require substantial additional collateral.

Operational Impact: Members need to implement monitoring systems to track net directional exposures and ensure adequate collateral buffers to meet potential CAM obligations. The daily review and blocking mechanism requires operational readiness.

Market Impact: May reduce excessive concentration in single directional bets, promoting more diversified and hedged strategies. Could impact liquidity for very large traders but enhances overall market stability and resilience under stress conditions.

Risk Mitigation: Strengthens ICCL’s ability to manage extreme but plausible market scenarios by ensuring adequate margins against concentrated exposures from systemically important participants.

Impact Justification

Major new margin requirement affecting large derivative traders with unhedged positions exceeding INR 1,000 crore, requiring 4-5% additional margin which significantly impacts capital requirements