The core of the risk management system of NCCL shall comprise of the following:

  1. Initial Margins (IM): Margins to cover potential future exposure  to participants in the interval between the  last margin collection and the close out of positions following a participant default subject to minimum percentage floor value as prescribed by SEBI from time to time.
  2. Extreme Loss Margins (ELM): Margins to cover the loss in situations that lie outside the coverage of the VaR based initial margins.
  3. Additional Margins: Margins imposed on both long and short sides over and above the other margins, would be called additional margins.
  4. Tender Period Margin/Pre-expiry Margin: NCCL shall levy tender period /pre-expiry margin which increases gradually every day beginning from the pre-determined number of days before the expiry of the contract as applicable.
  5. Delivery Period Margin: Appropriate delivery period margin shall be levied by NCCL on the long and short positions marked for delivery till the pay-in is completed by the member. Once delivery period margin is levied, all other applicable margins shall be released.
  6. MTM (Mark to Market) Settlement: Mark to market settlement of all open positions of clients/members shall be done on daily basis.
  7. Concentration Margins: Margins to  cover the risk  of longer period  required for liquidation  of concentrated positions  in any commodity derivatives contract.

Margining at client level: NCCL impose initial margins at the level of portfolio of individual client comprising of his positions in futures and options contracts on each commodity.