InvestorQ : Is it true that MCX has made the margining norms for crude oil tougher after the fiasco of negative pricing on 20 April?
Priyanka N made post

Is it true that MCX has made the margining norms for crude oil tougher after the fiasco of negative pricing on 20 April?

Answer
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NISHA Nayak answered.
5 months ago


In the light of the losses to retail traders on crude contracts last week, the Multi Commodity Exchange Clearing Corporation Limited (MCXCCL) announced additional risk management measures on crude oil contracts which will be effective from April 30. MCX currently has 95% market share of crude oil trading in India. Some of the risk management measures taken by the exchange include increase in additional margins on crude oil futures contracts based on the price movement in the market. An initial margin of 100% will be levied for all existing and yet to be launched crude oil contracts while a minimum initial margin of Rs.95,000 per lot will be levied. An additional margin of Rs.100,000 per lot shall be levied on near month crude oil futures contracts and on short side of near month crude oil options contracts. Such additional margins shall be Rs.50,000 for next month contracts. In addition, if the price of crude oil falls between 50-75%, an additional margin of 50% of the MTM loss would be levied. Such margins will be graded up with the extent of MTM loss. The basic idea is to keep the very small retail traders away from speculating on Crude oil futures.