Sebi firms up risk management guidelines in commodity futures trade

The Securities and Exchange Board of India (Sebi) has prescribed higher margins for futures trade in both agricultural and non-agricultural commodities to address the risk of default in cases of high volatility.
 
For the first time, it has provided options for clearing corporations to divide commodities into three broad categories, depending on realised volatility over the previous three years. If actual annualised volatility was between nil and 15 per cent, the contract would be in a low volatility category. If between 15 and 20 per cent, medium; if above 20 per cent, a highly volatile category.
 
“Realised volatility