What are additional margins in Commodities, and why are they levied?

Additional margins may be levied temporarily during periods of heightened market volatility to help protect clients from sudden adverse price movements and potential margin shortfalls. Global macroeconomic developments, geopolitical events, and significant movements in international markets such as LME and COMEX can result in sharp price gaps when domestic exchanges are closed. Such overnight risks may lead to substantial mark-to-market losses during the day or when markets reopen next day.

To mitigate these risks, Kotak Neo may maintain an additional margin buffer over and above the exchange-prescribed margins. This proactive risk management measure helps reduce the likelihood of sudden position liquidations, protects client capital from extreme market shocks, and supports overall market stability by minimizing default risk during periods of exceptional volatility.

These additional margins are dynamic, risk-based, and temporary in nature, and are reviewed periodically based on prevailing market conditions and volatility levels. Margins levied can be checked on mobile application or in the margin statement shared.