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FMC slaps additional 5% margin on base metals

A margin is initial minimum amount of cash an investor must put up to open an account to start trading

Press Trust of India  |  New Delhi 

Commodity market regulator has imposed an additional margin of 5% on trading in futures, to tackle volatility in the market.

The increased rate of margin will be effective from Monday.


"In view of the current price volatility in the prices of Aluminium, Copper, Lead, and Zinc, the commission has decided to impose an additional margin of 5% in all the contracts of base metals, namely Aluminium, Copper, Lead, and Zinc traded on the national exchanges till further orders," Forward Commission (FMC) said in the order.

The margin on in the current active accounts was; Copper-6.94%, Lead-7.32%, Nickel-6.77%, Zinc-7.60% and Aluminium-7.05%.

A margin is the initial minimum amount of cash an investor must put up to open an account to start trading.
 
"On average basis the margin was seven% on which now have increased to twelve%, this move has come after the and touched the life time high on commodity exchange last month," Religare Securities Metals Research Associate Vice President Sugandha Sachdeva said.

For instance, a trader would now have to pay approximately Rs 57,000 as margin to buy or sell a lot of one tonne of from Monday as against around Rs 32,000 earlier a tonne.

"In the last few sessions, were quite volatile due to currency fluctuations and fears of military action in Syria, after the increase in the margin it is likely that will be less volatile," Sachdeva said.

The move with regards to comes a week after the doubled the margin on gold futures.

First Published: Sun, September 08 2013. 12:39 IST
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