The Securities and Exchange Board of India vide its notification dated 16th December 2021, has revised the framework for enabling verification of upfront collection of margin from clients in commodity derivatives segment.
SEBI in its earlier circular dated 29th November 2019, had mandated That the cut off time for the purpose of determining minimum threshold of margins (Initial Margin/Extreme Loss Margin) to be collected by Members from their clients shall be 5:00 PM for commodity derivative contracts having trading hours beyond 5:00 PM due to the limitations with availability of banking channels beyond 5:00 PM.
However, due to the limitations with availability of banking channels beyond 5 pm. As both banking facilities RTGS and NEFT are functional round-the-clock on all days now, Sebi has withdrawn the above circular. Consequently, the risk parameter files currently used by the clearing corporations for collecting margins from the members shall also be used for generating margin obligations from the clients throughout the trading hours in the commodity derivatives segment.
Therefore with regard to framework for enabling verification of upfront collection of margins from clients, SEBI has modified the framework as follows:
Clearing Corporations shall send minimum 4 snapshots of client wise margin requirement to TMs/CMs for them to know the intra day margin requirement per client in each segment. The number of times snapshots need to be sent in a day may be decided by the respective Clearing Corporation depending on market timings subject to a minimum of 4 snapshots in a day. The snapshots would be randomly taken in pre-defined time windows
Further for commodity derivatives segment, clearing corporations shall send an additional minimum two snapshots for commodity derivative contracts which are traded till 9 pm, and additional minimum three snapshots for the commodity derivatives contracts which are traded till 11:30/11:55 pm. Margins/EOD margins shall be determined as per the relevant Risk Parameter File.
