The Multi Commodity Exchange Clearing Corporation Limited (MCX) on April 09, 2026, issued the notification regarding the Alternate Risk Management Framework Applicable in case of Near Zero and Negative Prices.
The following has been stated namely: -
•Multi Commodity Exchange Clearing Corporation Limited (MCXCCL) has announced the Alternate Risk Management Framework (ARMF) for handling situations where commodity prices may approach zero or turn negative during May 2026.
•The framework currently applies to:
oCrude Oil
o Natural Gas
including their mini contracts.
• ARMF can be activated if major warning signs appear, such as:
o Prices falling more than 50% within 20 trading days
o International benchmark exchanges introducing negative-price measures
o Launch of near-zero/negative strike options
o Any other market stress indicating possible negative prices.
• ARMF will trigger if prices fall below these thresholds:
o Crude Oil: ₹1851
o Natural Gas: ₹158.50
Once triggered, stricter risk controls apply, including:
• Higher minimum margins
• Extra Extreme Loss Margin (ELM)
• Removal of spread margin benefits
• Use of the Bachelier pricing model for options.
• Additional margins will increase sharply during severe price crashes:
o 50–75% fall: extra margin = 50% of MTM
o 75–90% fall: extra margin = 100% of MTM
o Above 90% fall: extra margin = 125% of MTM
MCXCCL may also impose further margins depending on market volatility.
[Notification No. MCX/MCXCCL/186/2026]
