NSE To Levy Additional Margins On Gold And Silver Contracts — Here's What This Means
NSE's decision to hike margin requirement comes at a time when gold and silver prices have witnessed an unprecedented rally this calendar year.
The National Stock Exchange (NSE) is increasing margins for gold and silver contracts, a move to aimed at managing risk amid extreme price volatility in these precious metals, the exchange announced through a circular on Wednesday.
In the circular, NSE stated it would levy an additional margin of 2.5% on all silver future contracts and 1% on all gold future contracts. These new margin rates will take effect from Oct. 23, 2025.
What Does This Mean For You?
NSE's move to charge additional margins for gold and silver contracts effectively makes it more expensive for traders to hold or create new positions in gold and silver futures.
A margin, after all, is simply a good-faith deposit or collateral that a trader must secure in order to cover up potential losses on a futures contract.
By increasing this deposit, NSE effectively reduces the trader's leverage. The additional margin is a hike on top of the normal margin requirement.
Why The Move Now?
NSE's decision to hike margin requirement comes at a time when gold and silver prices have witnessed an unprecedented rally this calendar year.
Naturally, this has led to more volatility in gold prices and enhanced speculation. Gold and silver, being more of a safe-haven asset rather than risk assets, should ideally not incur such volatility.
The decision to increase margins, therefore, will lead to higher costs, which in turn, could cool down speculative buying and selling which contribute to these wild price swings.
It also ensures that traders, even if they still buy or sell contracts, can cover their losses thanks to enhanced normal margin requirements.
Ultimately, this move would lead to more stability within the future trading for gold and silver, which, in particular, has witnessed wild price swings in the last couple of months.
