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Tuesday, January 19, 2021
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MCX eases margin on crude oil contracts

MCX has reduced the minimum initial margins and short option minimum margin to 50 per cent and withdrawn additional margin on all crude oil futures and on the short side of options contracts.

The move comes close on the heels of market regulator SEBI rationalising the norms for stress testing in historical scenarios in Commodity Derivatives segment and eased collection of margins by exchanges. The changes in margins will be with immediate effect, said the exchange.

In April, MCX had levied an initial margin of 100 per cent on crude oil contracts with minimum initial margin of ₹95,000 per lot after crude prices plunged below zero. It had also put a margin of ₹1 lakh per lot on near month crude futures contract and on short side of near month crude options contract.

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Further, an additional margin of ₹50,000 per lot was also levied on all other crude futures and on short side of crude options contracts.

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On Wednesday, MCX has withdrawn the additional margin of ₹1 lakh in near month and ₹50,000 on far month of crude oil futures contracts. The exchange will, however, levy an additional margin based on the price movement.

Spread margin benefit

The benefit of spread on initial margins shall be provided in crude oil contracts only when each individual contract in the spread is from the first three expiring contracts. Spread margin benefit on spread positions shall be entirely withdrawn on the start of the expiry day.

The exchange will continue with extreme loss margin of 1.25 per cent on all crude futures and short positions of all options contracts. The Volatility Scan Range will continue to remain at 20 per cent for all crude options, it said.

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