Commodity market regulator FMC has imposed an additional margin of five per cent on base metals trading in futures, to tackle volatility in the market.
The increased rate of margin will be effective from Monday.
"In view of the current price volatility in the prices of Aluminium, Copper, Lead, Nickel and Zinc, the commission has decided to impose an additional margin of 5 per cent in all the contracts of base metals, namely Aluminium, Copper, Lead, Nickel and Zinc traded on the national exchanges till further orders," Forward Markets Commission (FMC) said in the order.
The margin on base metals in the current active accounts was; Copper-6.94 per cent, Lead-7.32 per cent, Nickel-6.77 per cent, Zinc-7.60 per cent and Aluminium-7.05 per cent.
A margin is the initial minimum amount of cash an investor must put up to open an account to start trading.
"On average basis the margin was seven per cent on base metals which now have increased to twelve per cent, this move has come after the copper and lead touched the life time high on commodity exchange MCX last month," Religare Securities Metals Research Associate Vice President Sugandha Sachdeva said.
For instance, a trader would now have to pay approximately Rs 57,000 as margin to buy or sell a lot of one tonne of copper from Monday as against around Rs 32,000 earlier a tonne.
"In the last few sessions, markets were quite volatile due to currency fluctuations and fears of military action in Syria, after the increase in the margin it is likely that markets will be less volatile," Sachdeva said.
The move with regards to base metals comes a week after the FMC doubled the margin on gold futures.