The Multi Commodity Exchange Clearing Corporation Limited (MCXXL) on December 05, 2025, issued the notification regarding the Alternate Risk Management Framework Applicable in case of Near Zero and Negative Prices.
The following has been stated namely: -
• The Alternate Risk Management Framework (ARMF) for near-zero or negative prices applies only to Crude Oil and Natural Gas (including Mini contracts).
• ARMF may be activated if the commodity price falls over 50% within 20 trading days, if international benchmark exchanges introduce negative-price measures, if near-zero/negative strike options are listed, or other conditions indicating negative price likelihood.
• If any trigger occurs, MCXCCL and MCX will review the situation and decide formally on ARMF activation, announcing it via a separate circular.
• Threshold Prices (Jan 2026): ARMF will be triggered if prices fall below:
o Crude Oil / Crude Oil Mini: ₹1300/unit
o Natural Gas / Natural Gas Mini: ₹80/unit
• Absolute Minimum Initial Margins (Jan 2026):
o Crude Oil: ₹227,700/lot
o Crude Oil Mini: ₹22,770/lot
o Natural Gas: ₹155,300/lot
o Natural Gas Mini: ₹31,060/lot
• The higher of percentage-based margin or absolute values will apply.
• Extreme Loss Margin (ELM) Thresholds: For Jan 2026, ELM floor values apply based on thresholds:
o Crude Oil: ₹1625/lot
o Crude Oil Mini: ₹163/lot
o Natural Gas: ₹1250/lot
o Natural Gas Mini: ₹250/lot
• All spread margin benefits are withdrawn when ARMF is active.
• The Bachelier Model (based on price volatility) will be used for pricing options under ARMF.
• Additional Margins Based on Price Fall:
o 50–75% price fall: Additional 50% of MTM
o 75–90% price fall: Additional 100% of MTM
o >90% price fall: Additional 125% of MTM
• MCXCCL may impose further margins if required.
[Notification No. MCX/MCXCCL/627/2025]
