Pre-Expiry Margin on commodities under Alternate Risk Management Framework
Summary
SEBI mandates the imposition of pre-expiry margins on cash-settled commodity contracts susceptible to near-zero or negative prices under the Alternate Risk Management Framework. These margins are levied during the last five trading days prior to expiry, increasing by 5% each day. The regulation became effective from the first trading day of April 2021.
Text
pre-expiry margins shall be imposed on cash settled contracts wherein the underlying commodity is deemed susceptible to possibility of near zero and/or negative prices as identified by exchange/CC under ARMF circular. In case of these contracts, pre-expiry margins shall be levied during the last five trading days prior to expiry date, wherein they shall increase by 5% every day.
The circular shall be effective from the first trading day of the month of April 01, 2021.
This circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Source: SecMarx — Pre-Expiry Margin on commodities under Alternate Risk Management Framework. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.