MCX Margin Requirements Explained
One of the most important aspects of trading in commodity futures on the Multi Commodity Exchange (MCX) is understanding margin requirements. Margins determine how much capital you need to place a trade and manage open positions.
This article breaks down the different types of MCX margins and how they impact your trading strategy and risk management.
What is Margin in MCX Trading?
Margin is the minimum amount a trader must deposit with their broker to enter and maintain a futures position. It acts as collateral to cover potential losses in volatile commodity markets.
Unlike full-value stock purchases, MCX trading allows you to control large contract sizes with a fraction of the total value, thanks to margin trading.
Types of Margins in MCX
1. Initial Margin
This is the total amount required upfront to enter a trade. It includes:
- SPAN Margin
- Exposure Margin
Your broker blocks this amount from your available funds when you initiate a trade.
2. SPAN Margin (Standard Portfolio Analysis of Risk)
The SPAN Margin is the core part of the margin and is calculated based on:
- Historical price volatility
- Position risk
- Commodity-specific parameters
It changes daily based on market conditions.
3. Exposure Margin
An additional fixed percentage added to the SPAN to account for unexpected volatility. It acts as a buffer against intraday price shocks.
Typical structure:
- SPAN = ~60–70%
- Exposure = ~30–40%
4. Mark-to-Market (MTM) Margin
This is the profit or loss from open positions, adjusted daily to reflect closing prices. If your position is in a loss, you may need to top up your account to maintain the required margin level.
Margin Example: Crude Oil Futures
| Parameter | Value |
|---|---|
| Lot Size | 100 barrels |
| Price | ₹6,500/barrel |
| Contract Value | ₹6,50,000 |
| SPAN Margin | ₹65,000 (10%) |
| Exposure Margin | ₹19,500 (3%) |
| Total Margin | ₹84,500 approx. |
You need ~₹85,000 to control a contract worth ₹6.5 lakh.
Margin Requirements for Popular MCX Contracts
| Commodity | Total Margin Required (Approx.) |
|---|---|
| Gold (1 kg) | ₹1.2 – ₹1.5 Lakhs |
| Gold Mini | ₹12,000 – ₹18,000 |
| Silver (30 kg) | ₹2.2 – ₹2.8 Lakhs |
| Crude Oil | ₹80,000 – ₹90,000 |
| Copper | ₹50,000 – ₹60,000 |
Note: Margin amounts vary daily and across brokers.
How to Check Daily MCX Margins
- Visit www.mcxindia.com
- Go to “Market Data > Margins”
- Check SPAN + Exposure margins for each contract
- Brokers like Zerodha and Angel One also publish updated margin calculators
Margin Call: What Happens If Margin Falls?
If your account balance drops below the maintenance margin:
- You’ll receive a margin call
- You must deposit more funds or reduce your position
- Failure to act may lead to auto-square-off
Tips for Managing MCX Margins
- Use margin calculators before placing trades
- Avoid over-leveraging even if low margin is required
- Always keep a buffer above required margin
- Monitor open positions during volatile hours (especially evenings)
FAQs
Can I trade MCX with ₹10,000?
Yes, you can start with smaller contracts like Gold Petal, Silver Micro, or trade Crude Oil Mini, depending on margin requirements.
Are MCX margins fixed?
No. They change based on volatility, SEBI rules, and SPAN calculations.
What happens if I don’t meet a margin call?
Your broker may square off your position to cover potential losses.
Is margin required for both intraday and carry-forward trades?
Yes. Intraday may offer slightly reduced margins under MIS, but carry-forward positions need full NRML margins.
Can margin requirements vary between brokers?
Slightly. Brokers use the same base (MCX/SEBI), but may add additional safety margins depending on internal risk policies.
