MANU/SDER/0015/2016

Ministry : Securities and Exchange Board of India

Department/Board : Commodity Derivatives Market Regulation Department

Circular No. : SEBI/HO/CDMRD/DRMP/CIR/P/2016/77

Date : 01.09.2016

Notification/ Circulars Referred : Circular CIR/CDMRD/DRMP/01/2015 dated October 01, 2015 MANU/SDER/0004/2015

Citing Reference:
Circular CIR/CDMRD/DRMP/01/2015 dated October 01, 2015 MANU/SDER/0004/2015  Referred

To,

The Managing Directors / Chief Executive Officers
National Commodity Derivatives Exchanges

Sir / Madam,

Additional risk management norms for National Commodity Derivatives Exchanges.

1. With an objective of streamlining and strengthening the risk management framework across national commodity derivatives exchanges SEBI vide circular CIR/CDMRD/DRMP/01/2015 dated October 01, 2015, had prescribed comprehensive risk management framework for National Commodity Derivatives Exchanges.

2. In order to further strengthen the risk management framework of commodity derivatives markets and avoid any systemic risk, it has been decided to prescribe additional norms/modify (to the extent specified hereunder) certain existing norms on risk management at National Commodity Derivatives Exchanges. The additional/modified norms are placed at Annexure-I.

3. The norms prescribed in this circular shall be implemented by national commodity derivatives exchanges latest by December 1, 2016, except for the norm prescribed for base minimum capital at paragraph 7 of Annexure I, which shall be complied with latest by April 01, 2017.

4. It is emphasized that risk management is primarily the responsibility of exchanges. In cases of excessive market volatility or circumstances where risk element is higher, exchanges are expected to impose higher margins and/or additional margins in the form of special/ ad-hoc or other margins as considered appropriate by the exchanges.