New Student User- Use Code HELLO

Register Now

SEBI introduces Pre-expiry Margins to Restrain Negative Price Scenarios

Published on February 26, 2021
Current Context: The Securities and Exchange Board of India (SEBI) will be introducing pre-expiry margins to curb negative price scenarios.
SEBI introduces Pre-expiry Margins to Restrain Negative Price Scenarios
  • This will help to strengthen the risk management framework.
  • The pre-expiry margins will be applicable to certain commodities which are under the Alternate Risk Management Framework (ARMF).
  • The SEBI will be introducing pre-expiry margins on cash-settled contracts from 1st April 2021. Under this, the commodities are deemed to be susceptible to possible near zero or negative price.
  • The pre-expiry margins will be imposed during the last 5 trading days which will be prior to the expiry date so that they will raise by 5% daily.
  • This will result in encouraging a significant reduction of open interest as the contract comes near to the expiry date.
  • Static Part: 
    • HQ of SEBI: Mumbai
    • Chairman of SEBI: Ajay Tyagi

Question: 

Q.1 Which of the following organisation announced to introduce pre-expiry margin to certain commodities of ARMF, in order to curb negative price scenarios?
a. RBI
b. SEBI
c. IRDAI
d. NABARD
ebook store

About us

ramandeep singh

Ramandeep Singh is a seasoned educator and banking exam expert at BankExamsToday. With a passion for simplifying complex concepts, he has been instrumental in helping numerous aspirants achieve their banking career goals. His expertise and dedication make him a trusted guide in the journey to banking success.

  • Follow me:
Close Menu
Close Menu