MCX’s clearing corporation, MCXCCL, has sharply raised the margins required for trading in crude oil derivatives.

The initial margin has been fixed at Rs 95,000 a lot (100 barrels) for all existing and yet to be launched contracts.

For near month contracts, an additional Rs 1 lakh a lot will be levied. This will also apply to short side — call and put sellers — of the near month crude oil options contact.

Additionally, a 50% margin will be levied on other crude futures contracts and on sellers of calls and put options.

Effectively, the near month margin to trade will rise to minimum Rs 1.95 lakh a lot. This used to be Rs 60-70,000 earlier.

Moreover, in case of heightened volatility if the overnight price falls between 50-75%, 50% of the mark or market fall will be levied as additional margin. If the MTM fall is between 75-90%, 100% of MTM will be levied and if it is in excess of 90%, 125% will be collected as margin.

The move comes close on the heels of the CCL settling the April expiry contract at a negative Rs 2,884 a barrel, following negative close of the Nymex crude contract that MCX crude mirrors. Brokers on the long side saw their collateral with the CCL being used to make the payout to those on short side due to non-anticipation of negative pricing and the exchange shutting at a shortened time of 5 pm.