SEBI Relaxes Margin Rules For Commodity Derivatives Early Pay-In Positions

The Securities and Exchange Board of India (SEBI) has revised rules governing the early pay-in mechanism in the commodity derivatives segment. It allows clearing corporations to exempt margins on positions backed by certified goods deposited in accredited warehouses.

The changes were notified through a circular issued on 19 June and will come into effect from 21 September 2026.

Provisions Under Revised Framework

Under the revised framework, clearing corporations will continue to offer the early pay-in facility. The mechanism allows market participants to deposit certified goods in warehouses accredited by clearing corporations against eligible commodity derivatives contracts.

SEBI said clearing corporations can now decide, based on their assessment of risk, whether to exempt all categories of margins for positions where early pay-in has been completed. However, mark-to-market (MTM) margins will continue to be collected from market participants holding such positions.

Change Follows Industry Representations

The regulator said the revision was made after receiving representations from market participants. The proposal was also discussed by the Working Group reviewing the delivery and settlement framework for agricultural commodity derivatives. The Commodity Derivatives Advisory Committee (CDAC) also examined the matter before the regulator finalised the changes.

The revised norms provide additional flexibility to clearing corporations in handling margin requirements linked to delivery-backed positions. Earlier, the framework specified the availability of the early pay-in facility but did not explicitly provide the same level of flexibility regarding margin exemptions based on risk evaluation.

SEBI stated that certified goods deposited under the early pay-in mechanism will continue to serve as the basis for availing the facility. The regulator has directed stock exchanges and clearing corporations operating commodity derivatives segments to make the required system modifications before the framework takes effect. They have also been asked to inform their members about the operational changes.

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Protect Investors’ Interest

The circular applies to recognised stock exchanges and clearing corporations offering commodity derivatives trading and settlement services. SEBI said the changes have been introduced under its mandate to protect investor interests while supporting the orderly development and regulation of the securities market.

The regulator expects exchanges and clearing corporations to complete implementation-related preparations before the September rollout date.

Sources:

ANI

The Economic Times