What is the Margin requirement in MCX/Commodity?
The margin requirement in MCX or commodity trading refers to the minimum
amount of funds traders must maintain in their trading accounts to initiate and
hold positions in commodity futures contracts. This margin serves as collateral
to cover potential losses from trading activities. The margin requirement
typically consists of two components:
1. Initial Margin: This is the minimum amount of funds required to open a new
position in a commodity futures contract. It is calculated based on the
contract's value and the prevailing market conditions.
2. Maintenance Margin: This is the minimum amount of funds that traders must
maintain in their accounts to keep their positions open. Suppose the account
balance falls below the maintenance margin level due to losses incurred in
trading. In that case, traders may need to deposit additional funds to meet the
margin requirement and avoid liquidating their positions.
The margin requirement ensures that traders have sufficient funds to cover
potential losses and fulfill their obligations in the commodity market. It
helps mitigate risks associated with price fluctuations and market volatility.
The specific margin requirements may vary depending on factors such as the type
of commodity, contract specifications, and regulatory guidelines. Traders must
understand and adhere to the margin requirements set by the exchange and their
brokers to manage their trading activities effectively.
Important Points to Note:
1. The Premium released from selling Equity Options cannot be used to open a
fresh position in MCX Commodity.
2. Profit realised by trading MCX Commodity F&O Contracts and Equity
Derivatives Contract will not be released as margin benefit on same day.
3. Margin released after selling Equity Derivatives Futures can be used for MCX
Trading.
4. Equity Stocks sale benefit will be also not considered for opening a fresh
position in MCX Commodity.
Check the below link –
https://www.mcxindia.com/market-operations/clearing-settlement/daily-margin

Margin Calculation:
For Silver:
- Price: Rs. 60,500 per unit
- Lot size = 30 units/quantity
- Initial Margin: 20.25%
- ELM (Extreme Loss Margin): 1.25%
- Total Margin Requirement: 21.5%
Formula:
Total Margin Required = (Price * Lot Size) * Total Margin Percentage
Example Calculation:
Total Margin Required = (60,500 * 30) * (21.5/100) = Rs. 3,90,225 per lot of
Silver in delivery.
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