Margins
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Margins Home » Market Operations » Margins

Margins guarantee the price performance and eliminate risk of default on either side of the trade. Financial safeguards provided by NDEX clearing protects the financial interests of both parties in a trade, leading to sound markets and deeper liquidity.

Margin helps to ensure a clearing member can cover potential losses with his trading positions. All margins shall be collected upfront from the members and shall be grossed at the level of individual client and grossed across all clients at the member level.
 Initial Margin is the amount of money that is required to open a buy or sell position on a futures contract. The Initial Margin requirement shall be based on a worst case loss scenario of price changes over a single day. Value at Risk (VAR) is a technique used to estimate the probability of loss of value of an asset or group of assets based on the statistical analysis of historical price trends and volatilities.
 Price change scenarios will be computed to cover a 99% VAR over a period of one day. Daily volatility of the futures prices is considered for the computation of VAR. Volatility is calculated using Exponentially Weighted Moving Average (EWMA) Method. The standard deviation shall be set as the volatility estimate at the beginning itself.

In addition to initial margin, additional margin, long margin / short margin and regulatory margin may be levied and changed time-to-time under the guidelines of regulation/Exchange. Calendar spread margin benefit will also be given based on members open positions. Tender Period margins and Delivery Period Margins are also levied on contracts nearing expiry. Levy of margins shall be intimated to the members through the various modes of communication by Exchange.

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