Description

NSE introduces 15% additional exposure margin on derivatives for securities where top 10 clients account for over 20% of MWPL, effective November 26, 2025.

Summary

NSE Clearing Limited has introduced an additional exposure margin framework for securities under Market-Wide Position Limit (MWPL) where client concentration is high. An additional 15% exposure margin will be levied on equity derivatives for securities where the top 10 clients account for more than 20% of the MWPL. This measure is designed to mitigate concentration risk and will be reviewed monthly based on 3-month rolling data. The framework becomes effective November 26, 2025, after the expiry of November 2025 derivative contracts.

Key Points

  • Additional exposure margin of 15% applicable on equity derivatives segment
  • Applies to securities where top 10 clients hold more than 20% of MWPL
  • Higher of additional exposure margin or additional surveillance margin will be levied if both are applicable
  • Framework based on 3-month rolling data with monthly reviews
  • Five securities initially identified: RBL Bank, HFCL, JSW Energy, SAIL, and Sammaan Capital
  • References NSE circular No. NSE/INVG/40472 dated March 18, 2019

Regulatory Changes

This circular introduces a new concentration-based margin framework for derivative contracts. The additional exposure margin supplements existing margin requirements and is triggered when client concentration exceeds specified thresholds. The framework operates alongside the existing surveillance margin system, with the higher of the two margins being applied to prevent regulatory arbitrage.

Compliance Requirements

  • Trading members must ensure adequate margin collection from clients trading in affected securities
  • Members need to monitor the list of affected securities which will be updated monthly
  • Risk management systems must be updated to accommodate the additional 15% margin requirement
  • Contact risk_ops@nsccl.co.in or call 1800 266 0050 (IVR option 2) for queries

Important Dates

  • Circular Date: November 24, 2025
  • Effective Date: November 26, 2025 (immediately after expiry of November 2025 derivative contracts)
  • Review Frequency: Monthly basis using 3-month rolling data

Impact Assessment

Market Impact: The 15% additional margin requirement will increase capital costs for traders and investors holding derivative positions in the affected securities. This may reduce speculative activity and improve price discovery by discouraging excessive concentration.

Operational Impact: Trading members must enhance their margin monitoring and collection systems to accommodate dynamic margin requirements. The monthly review mechanism means the list of affected securities will change regularly, requiring continuous system updates.

Risk Mitigation: This measure addresses systemic risk arising from high client concentration in specific securities, reducing the potential for coordinated market manipulation or excessive volatility during unwinding of large positions.

Affected Securities: Initial list includes RBLBANK, HFCL, JSWENERGY, SAIL, and SAMMAANCAP, representing diverse sectors including banking, telecommunications, energy, steel, and financial services.

Impact Justification

Significant margin increase of 15% on derivative positions for affected securities will directly impact capital requirements and trading strategies for market participants dealing with these stocks.