Initial margin (IM) - The amount that must be deposited by a customer with the
DGCX Member at the time of (or before) entering into a contract is called the initial
margin. This margin is meant to cover the potential loss in one day. The margin is a
mandatory requirement for parties who are entering into the contract. Upon proper
fulfillment of all obligations associated with a trader's contractual position, the initial
margin is returned to the trader.
When the clearing commitment deposited with the DCCC falls below a certain level,
the clearing member is required to deposit additional funds to replenish the margin
so as to bring it back to the initial level. The demand made for depositing of such
funds to meet the shortfall in margins is known as margin call. Such margin call
may be made by the DCCC on a clearing member or by a clearing member on his client.
Mark-to-Market (MTM) / Variation Margin (VM) - At the end of each trading
day, the open positions are adjusted to reflect the client's gain or loss. This is known
as marking to market the account of each member.
Special Margin - The Exchange, in case of additional volatility, may decide to impose
special margin as deemed fit from time to time. The special margin could even be
imposed on all open positions or any particular contract or commodity. Special margin
imposed would be over an above other margins applicable (e.g. Initial Margins,
MTM Margin etc.).
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