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Sebi tightens risk management for commodity derivatives

Exchanges shall take full responsibility on default; regulator doubles initial margin, introduce concentration margin and ends spread margin benefits

Rajesh Bhayani  |  Mumbai 

The Securities and Exchange Board of India (Sebi) announced a series of measures for strengthening and upgrading of risk management in commodity derivatives markets. Some new concepts were also introduced to deal with liquidity problems in stressed situations.

For instance, up to two days of risk coverage by initial margin, concentration margin, tools to regain matched book and 'default waterfall'. An exchange's accountability in a default has also been increased, to match those at equity exchanges. So far, exchanges were not a counter-party to trades but ensured and ...

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First Published: Thu, September 01 2016. 22:43 IST