15 Jan 2013

MCX Trading Investment/Margin


MCX Margin/Investment

Margin is the deposit money that needs to paid to buy or sell each contract of a commodity in MCX exchange.Margin, as used in futures trading, is a good faith deposit of cash.

MCX Margin levels are set by the MCX Exchange based on volatility(Market conditions) & can be changed at any time.Margin is required to trade in MCX ,it s like Investment to put to trade

MCX Margins are differ from commodity to commodity.The margin requirement for MCX commodities trading range from 5 % to 20 % of the value of a contract with a minimum of 5%,except for MCX Gold where the minimum margin is 4 %.


Initial Margin


The amount that must be deposited by a person at the time entering in to MCX trading as called Initial margin. This margin fixed by the MCX Exchange &its mandatory requirement for parties who are entering in to the contract. This margin meant to cover the potential loss in one day.

Additional Margin
In addition to Initial margin ,additional margins can be levied by the MCX exchange.In case of sudden higher than expected volatility, MCX exchange calls for an additional margin which is pre emptive move to prevent to potential default. This is imposed when one commodity extremely volatile, that time it has been put by the exchange/regulator to avoid adverse situation.

MTM
MTM is Mark to Market.MTM .MTM which happens on a continuous basis at the end of each day.
Daily mark to market settlement is done till the date of contract expiry.

When open poisiton held, this MTM be levied for price fluctuations of everyday.The Margin account is adjusted to reflect the investor’s gain (or)loss depending upon the closing price of the commodity in a day. MTM calculated until covering/closing the open position in MCX.

Margin Calculation:

Example
MCX Gold

Previous trading Day/Last trading day closing price In MCX   : 30800
                             MCX Price Quotation(Quoted price)        :  10gms
                             MCX Specified LOT Size (Quantity)          :   100
                             MCX  Specified Margin Percentage          :   4%
                   Lot value Of any MCX Commodity    = Price quotation*Lot size 
                   Lot Value of MCX Gold                       = 30800*100   =  30,80,000 

Margin  Of any commodity to trade in MCX      =  Lot Value *MCX margin/100
Margin of Gold to  trade in MCX                            =  30,80,000*4/100  
Margin/Investment required to Gold in MCX     Rs.1,23,200                                                                                                               
Investment required for MCX Gold Regular/Mega(1Kg)Rs.1,23,200     
The Margin/Investment Requirement of MCX Gold
MCX Gold Mini(100 gms)      = Rs.10,000-20,000(Approximate,changing everyday)
MCX Gold Guinea (8gms)      = Rs.1000-3000(Approximate,changing everyday)
MCX Gold Petal(1gm)            = Rs.100-500(Approximate,changing everyday)

MCX Silver 
Investment requirement/Margin of MCX Silver

MCX Silver Regular/Mega(30Kg) =Rs.90,000-95,000(Approximate,changing everyday)
MCX Silver Mini(5Kg)                    = Rs.10,000-20,000(Approximate,changing everyday)
MCX Silver Micro(1Kg)                   = Rs.3,000-6,000(Approximate,changing everyday) 
MCX Silver1000(1Kg,deliverable)  =Rs.3000-6,000(Approximate,changing everyday)

To Check All MCX Commodities Daily Margin :Click Here

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