Description

ICCL has revised the margin framework for commodity derivatives, updating Initial Margin, SOMM, MPOR, and VSR requirements for Brent Crude, WTI Crude, Gold, and Silver. Changes are effective from April 1, 2026.

Summary

ICCL has reviewed and revised the margin framework for the Commodity Derivatives Segment in accordance with SEBI circulars dated January 27, 2020 and January 11, 2021, and in modification of ICCL Circular No. 20250909-5 dated September 05, 2025. The revised framework updates the minimum Initial Margin (IM), Short Option Minimum Margin (SOMM), Minimum MPOR, and Minimum Volatility Scan Range (VSR) for key commodities. The changes take effect from the beginning of day on April 1, 2026.

Key Points

  • Brent Crude and WTI Crude are classified as Non-Agri, High Volatility; standard minimum IM and SOMM are 10%, MPOR 3 days, VSR 6%
  • However, per the lead exchange’s revised framework, WTI Crude and Brent Crude will carry a Minimum IM of 33%, SOMM of 33%, and VSR of 33%
  • Gold is classified as Non-Agri, Medium Volatility; minimum IM and SOMM at 8%, MPOR 2 days, VSR 5%
  • Silver is classified as Non-Agri, High Volatility; standard minimum IM and SOMM are 10%, MPOR 3 days, VSR 6%
  • Per the lead exchange’s revised framework, Silver contracts will carry a Minimum IM of 11.50%, SOMM of 11.50%, and VSR of 6%
  • Minimum IM % shall not be scaled up by MPOR
  • For Options contracts, MPOR shall be at least 2 days or MPOR of corresponding futures, whichever is higher
  • Margins on option sellers shall be higher of SOMM or VaR scaled up by MPOR

Regulatory Changes

  • Replaces and modifies ICCL Circular No. 20250909-5 dated September 05, 2025
  • References SEBI/HO/CDMRD/DRMP/CIR/P/2020/15 (January 27, 2020) and SEBI/HO/CDMRD/DRMP/CIR/P/2021/08 (January 11, 2021)
  • Significant upward revision of margin requirements for WTI Crude and Brent Crude (from 10% to 33% IM, SOMM, and VSR)
  • Upward revision for Silver IM and SOMM from 10% to 11.50%

Compliance Requirements

  • All members and participants in the Commodity Derivatives Segment must comply with the revised margin requirements
  • Members must ensure sufficient margins are collected from clients for Brent Crude, WTI Crude, Gold, and Silver positions
  • Other margins (Extreme Loss Margin, Crystallized Loss Margin, Tender Period Margin, Delivery Period Margin, Concentration Margin, Additional Margin, Additional Lean Period Margin, and Special Margin) remain unchanged and continue to apply

Important Dates

  • Circular Date: March 10, 2026
  • Effective Date: April 1, 2026 (beginning of day)

Impact Assessment

This circular has a high impact on participants in the Commodity Derivatives Segment, particularly those trading in Crude Oil (Brent and WTI) contracts. The tripling of minimum margin requirements for Crude Oil (from 10% to 33%) substantially increases the capital required to hold positions, which may reduce leverage and affect trading volumes. Silver traders face a modest increase from 10% to 11.50%. Gold margins remain unchanged. The revisions align with the lead exchange’s updated risk management framework, reflecting heightened volatility concerns in energy markets. Brokers and clearing members will need to update their risk management systems and communicate margin changes to clients before the April 1, 2026 effective date.

Impact Justification

Directly revises margin requirements for major commodity contracts (Crude Oil, Gold, Silver), significantly increasing minimum margins for WTI and Brent Crude to 33% and Silver to 11.50%, affecting all members and participants in the commodity derivatives segment.