Reserve Bank of India (RBI) vide Circular No. 20 dated December 12, 2022 (updated as on April 15, 2024) issued Master Directions – Foreign Exchange Management (Hedging of Commodity Price Risk and Freight Risk in Overseas Markets) Directions, 2022. Vide this circular, RBI has allowed Eligible entities having exposure to price risk of Gold to hedge such exposure in the International Financial Services Centre (IFSC), subject to the stipulations set out in the referred Master Directions.
For RBI Circular, please refer to https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12427&Mode=0

Exchange conducts trading session for Futures contracts from Monday to Friday: 09:00 Hrs. to 23:30 Hrs. Indian Standard Time (IST). The Exchange notifies list of Trading & Settlement holidays for each calendar year in advance through the Exchange Website.

1. Trading Unit / Market Lot: The Trading unit is the minimum quantity for a contract that can be bought / sold.
2. Price Quotation/ Base value: It is the Quantity units for which the prices are quoted for trading.
3. Maximum order size: Maximum order size is the maximum no. of lots that can be bought or sold in one Single order. The maximum order size of each commodity is given in its contract specifications.
4. Size: Tick size is the minimum price difference between the bid and ask for a particular contract. The tick size is given in the contract specifications.
5. Daily Price Limit: Daily Price Limit i.e. circuit filter limit is the percentage of variation allowed in the price of a commodity in a day with respect to its previous day’s close price. Circuit filter provides the maximum range within which a contract can be traded during the day. Such circuit filter is different for different commodities and has been specified in respective contract specifications. Orders, which are beyond daily price range, are rejected by the system.
6. Spot Price: Spot Price refers to the Average of XAU-USD price sourced from Bloomberg during the last 5 minutes from close of Trading Session for the day, rounded to the nearest tradeable tick.

1. The maximum Daily Price Limit shall be up till 9% of the Previous Close Price, which shall be gradually relaxed in steps of 3%.
2. The initial price limit shall be set at 3% from the Previous Close Price (PCP) of the contract. In case the daily price limit of 3% is breached, the daily price limit will be relaxed up to 6% without any cooling off period. In case the daily price limit of 6% is also breached, then after another cooling off period of 15 minutes, the daily price limit will be relaxed up to 9%.
3. In case the daily price limit of 9% is also breached, the price band would NOT be relaxed automatically. The Exchange shall consider the price movement in the International Market in such cases. If the price movement in international markets is more than the maximum daily price limit of 9%, the same may be further relaxed in steps of 3% and will be informed to the regulator immediately.

Orders are matched on price-time priority basis. Best buy order matches with the best sell order. The best buy order is the one with the highest price and the best sell order is the one with the lowest price.

1. Limit order: The user specifies the price at (or better than) which the trade should be executed.
2. Market Order: The user specifies only the order quantity. The order gets executed at whatever price the counter side orders are available till fulfilment of the entire quantity specified by the user. If the specified quantity is greater than the total quantity available in the counter side orders, the remaining quantity gets cancelled.
3. Stop loss orders: Stop Loss orders are kept by the system in suspended or abeyance mode and are activated only on trigger of a price, as defined by the member.

1. Good for Day (GFD) orders are available for execution only till end of the trading session of the order entry day.
2. Good till date (GTD) orders are available for execution till end of the date indicated in the order or till the last trading day of that contract month, whichever is earlier.
3. Good till cancel (GTC) orders are available for execution till maturity of the contract or till it is cancelled, whichever is earlier.
4. Immediate or Cancel (IOC) orders will get cancelled if not executed on submission of such an order. Such orders will not remain in the order book.

1. Stop Loss buy order – A Buy Stop loss order is an order which will be activated in the market when the LTP of the contract matches or exceeds the trigger price specified by the user. Stop loss buy orders are placed at or above the current market price
2. Stop Loss sell order - A Sell Stop loss order is an order which will be activated in the market when the LTP of the contract matches or falls below the trigger price specified by the user. Stop loss sell orders are placed at or below the current market price.
3. Stop Loss limit order - Stop-limit order will be executed at a specified or better price, after a given trigger price has been hit. Once the trigger price is hit, the stop loss-limit order becomes a limit order to buy or sell at the limit or better price.

Trigger price is specified by the user to allow the system to activate the stop loss order once the last traded price breaches the trigger price.

1. MTM Settlement means that any profit/ loss of the member based on trades and outstanding positions at the end of a trading day for the futures contracts is either debited or credited to Member’s settlement account.
2. The Mark to Market (MTM) settlement shall be done at the Daily Settlement Price.
3. The Member level and Client Level MTM obligations shall be calculated at the end of the Trading Day (EOD) based on Daily Settlement Price and MTM Obligations would be available for download to the Members.
4. The MTM Pay-in shall be collected in US Dollars at 15.00 Hrs. IST on T+1 day, whereas the MTM Pay-out shall be made in US Dollars at 18.00 Hrs. IST on T+1 day.
5. The MTM losses shall remain blocked from the Collaterals provided by the Members till the time of fulfilment of MTM Pay-in obligations by the Member.

IIBX Clearing accepts Cash, Cash equivalent and Non-Cash Collaterals (Other Deposits) Cash equivalent shall mean SBLCs, and the Bank Fixed Deposit Receipts (FDRs) issued by IBUs in GIFT IFSC and any form of collateral as may be prescribed from time to time. Non-Cash Collaterals (Other Deposits) shall mean Bullion Depository Receipts (BDRs) issued by India International Depository IFSC Ltd. and any other form of collateral as may be prescribed from time to time. The Non-Cash Collaterals shall be subject to applicable haircuts and daily valuation.

Cash equivalents shall be at least 50% of liquid assets. This would imply that Other Liquid assets in excess of the total Cash Equivalents would not be regarded as part of Member’s liquid assets as well as total liquid assets.

CMs are required to maintain at least 50% of the total collateral in the form of cash or cash equivalents. At individual client level, a client may have allocation of cash equivalent, less than the value of non-cash collateral provided by him. In other words, the minimum 50% cash equivalent collateral requirement may not be applied at the client level. For the purpose of monitoring of at least 50% cash-equivalent collateral at the level of CM, the excess cash- equivalent collateral of a client shall not be considered for other client or for proprietary account of TM/CM. However, the excess cash-equivalent collateral of proprietary account of TM/CM can be considered for clients trading/clearing through them, for the purpose of monitoring minimum 50% cash-equivalent requirement.

Initial Margin, Spread Margin, Extreme Loss Margin, Additional Margin, Special Margin, Concentration Margin, Delivery Margin

Initial margins are imposed to cover potential future exposure to participants in the interval between the last margin collection and the close out of positions following a participant default. This margin is based on the portfolio of individual client comprising of his positions in Futures. Margins are charged so as to be adequate to cover 99% VaR (Value at Risk) and applicable Margin Period of Risk (MPOR).
For details, please refer to https://derivative.iibx.co.in/Risk

Spread benefit in initial margin shall be permitted for Different expiry date contracts of the same underlying. In case of spread positions, additional margins shall not be levied. No benefit in Extreme Loss Margin (ELM) would be provided for spread positions i.e. ELM shall be charged on both individual legs. IIBX shall be free to charge margins higher than the minimum specified depending upon its risk perception.

The ELM Margin is a fixed percentage component to cover situations that lie outside the coverage of VaR based initial margins. ELM of minimum 1% on gross open positions shall be levied and shall be deducted from the liquid assets of the Clearing Member on an online, real-time basis. IIBX shall be free to charge margins higher than the minimum specified depending upon its risk perception.

Margins imposed on both long and short sides over and above the other margins, would be called as additional margins. The Regulator/IIBX may impose additional margins on both long and short side at such other percentage, as deemed fit. Removal of such Margins will be at the discretion of the Regulator/IIBX.

In case of high volatility, a margin at a percentage as deemed fit by the Regulator/IIBX, is imposed on either the buy or the sell side.

Delivery margins are levied on the long and short positions marked for delivery till the pay-in is completed by the member. The Delivery Margin charged seeks to cover the price movement of the underlying commodity from the date of expiry to the date of settlement. The Delivery Margin is computed as higher of 3% + 5 day 99% VaR of spot price volatility or 20%. IIBX may impose higher delivery margins if deemed fit.

IIBX shall impose adequate concentration margins (only on concentrated positions) to cover the risk of longer period required for liquidation of concentrated positions in any commodity. The threshold value for imposing concentration margin may be determined taking into account factors including open interest, concentration and estimated time to liquidation based on prevailing liquidity and possible reduction in liquidity in times of market stress etc. The quantum of concentration margins imposed may vary based on the level of concentration. Concentration Margin is chargeable to specific Client and Clearing Member(s) whose positions are relatively large in a given commodity, leading to a concentration of Open Interest (OI) in that commodity for that Client and Member as a percentage of the overall market wide OI. The concentration margin is based on pre-specified levels of OI for client / member (i.e. the Slabs), applicable to all clients and members alike that reach the Slabs, and therefore does not discriminate between clients/members who become eligible for its imposition. Concentration margins would become applicable to commodities only when the overall market wide OI of a commodity exceeds the specified Threshold Level of OI for that commodity.

Client 1 have purchased 10 lots of 31st July expiry.

Initial Margin (IM Amount):	6%
Extreme Loss Margin (ELM Amount):	1%
Additional Margin (AM Amount):	2%
Special Margin (SM Amount):	0%
Concentration Margin (CM Amount):	0%
Other Margin (CM Amount):	0%

Margin Computation as follows:

Detail Applicable Margin file shall be communicated by CC on regular basis.

Client 123 have traded in 3 different contracts

• a. Short position April month contract 19 Lots.
• b. Short position May month contract 38 Lots.
• c. Long position Dec month contract 30 Lots.

Margin Computation as follows:

• In 1st contract client is getting spread benefit for all 19 Lots short against 30 Lots long in Dec month contract.
• In 2nd contract client is getting partial spread benefit for 11 lots (after adjusting 19 lots in 1st contract). for remaining naked position 27 lots full initial margin is charged.
• In 3rd contract client is getting spread benefit for all 30 lots against 19 lots of Apr month and 11 lots of May month contract.

Margin Computation in details:

The margins shall be computed on real time basis. The computation of portfolio initial margin would have two components. The first is the computation of Initial Margin for each individual contract. At the second stage, these contract Initial Margins would be applied to the actual portfolio positions to compute the portfolio initial margin.

IIBX Clearing shall update EWMA volatility estimates for contracts at discrete time points each day (with a gap of not more than 2 hours between any two consecutive updates and at the end of the trading session) and the latest available scaled up EWMA volatility estimates would be applied to member/client portfolios on a real time basis.

The first Margin file shall be updated before start of market hours, intraday Margin files shall be updated at every two hours interval, and the last Margin file shall be updated at the End of the Day. The margin file shall be available for download from

https://derivative.iibx.co.in/IntradayVarMargin

In order to mitigate the risk arising out of accumulation of crystallized obligations incurred on account of intra-day squaring off of positions, IIBX shall calculate and levy Intraday Crystallized Mark to Market Losses (ICMTM) in the following manner:

1. ICMTM shall be computed for all trades which are executed and result into closing out of open positions.
2. ICMTM shall be calculated based on weighted average prices of trades.
3. ICMTM shall be adjusted against the free collateral of the Clients on a real time basis.
4. Crystallized losses at a contract level for a client shall be adjusted against crystallized profits at that time, if any, from another contract for the same client to arrive at client level profit or loss.
5. ICMTM so blocked/ adjusted shall be released on completion of daily mark to market settlement pay-in

Partial Squared off (Loss booked):

Partial Squared off (Profit & Loss booked):

Clearing & Trading Member shall be compulsorily placed in risk reduction mode when the collateral utilization breaches 90%. When a member moves into risk reduction mode:

1. All unexecuted orders shall be cancelled.
2. Only orders with Immediate or Cancel (IOC) attribute shall be permitted in this mode.
3. All new orders shall be checked for sufficiency of margins.
4. Members will be able to trade in normal mode as and when the collateral utilization goes below 85%.

Client margin in excess of 90% of the client collateral shall be identified for each client under a TM. The total of such client margin in excess of 90% of the client collateral, plus the proprietary TM margin shall be assessed against the TM proprietary collateral for monitoring of TM level risk reduction mode.

Sum of client margin in excess of 90% of the client collateral for each client under a TM plus the proprietary TM margin, in excess of 90% of TM proprietary collateral shall be calculated as TM margin in excess of 90% of TM collateral. Sum of such margin for each TM clearing through a CM, plus sum of client margin in excess of 90% of the client collateral for each client clearing through such CM, plus the proprietary CM margin shall be assessed against the proprietary CM collateral for monitoring of CM level risk reduction mode.

Once a CM is in RRM mode, all the TMs clearing through the CM shall be in RRM mode

For more details, please refer to https://derivative.iibx.co.in

• a. The procedure for blocking of margins only specifies the order of blocking of margins against the collateral allocated at the Client, Trading Member (TM) and Clearing Member (CM) Level by CM. The TM/CM shall be required to ensure that sufficient collateral is allocated to clients to cover their margin requirements.
• b. On receipt of a trade from a client account, the margin shall first be blocked from the value of the client collateral. If the client collateral is not sufficient, the residual margin shall be blocked from the TM proprietary collateral of the TM of such client. If the TM proprietary collateral is also not sufficient, then the residual margin shall be blocked from the CM proprietary collateral of the CM of such TM.
• c. In case of a trade from the proprietary account of a TM, the margin shall first be blocked from the TM proprietary collateral, and in case such collateral is not sufficient, then the residual margin shall be blocked from the CM proprietary collateral.
• d. Margins based on trades from proprietary account of the CM shall be blocked from the proprietary collateral of the CM only.

For more details, please refer to https://derivative.iibx.co.in

Delivery of Physical Gold Bars in the Vaults and creation of BDRs thereof is only permitted for Qualified Suppliers. The BDRs thus created and backed by Physical Gold Bars in the Vaults registered with IFSCA and empanelled by India International Depository IFSC Ltd. (IIDI) can be used for Delivery of contract by

1. Members,
2. Non-Resident Clients &
3. Qualified Suppliers (QS).

Resident Entities cannot settle their Short positions by giving physical delivery.

The Physical delivery of Gold can only be taken by eligible resident entities i.e. the Qualified Jewellers (QJs) and Special Category Client Banks in Domestic Tariff Area (DTA).
Settlement of long positions by taking physical delivery (by eligible resident entities) must result in import into DTA.
Resident Entities (Entities in DTA of India) that are not notified Qualified Jewellers or Special Category Client Banks, are not allowed to settle their long positions by taking Physical delivery of Gold.
The physical delivery can also be taken by the Members in IFSC, Non-Residents Clients and Qualified Suppliers.