NISM Series XVI - Commodity Derivatives Exam Notes
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The additional / special margins are imposed to prevent overheating in the market and to ensure market integrity. Additional margin is levied on both sides - buy and sell. Special margin is levied only on one side open interest - either buy or sell.
Concentration margin is an excellent tool to levy margin only on those clients which have concentrated contracted open interest on buy or sell side vis-?-vis total open interest in that commodity / contract.
Additional and Special margins are on all the clients within a commodity but concentration margins are on selective clients
The extra margins during the tender and delivery period are collected from those who have an open position in the market as the exchange faces the risk of delivery defaults.
The extra margin applied to all open positions once they enter the tender period or delivery period (usually the last 5-10 days before the expiry date of the contract) is known as tender period/delivery period margin.
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