UNDERSTANDING ADDITIONAL EXPOSURE MARGIN ON MWPL SECURITIES

Clearing Corporations introduced a dynamic risk-control mechanism called Additional Exposure Margin (AEM) on select Derivative securities where market positions are highly concentrated among a few participants.

Hence, in accordance with NSE circular No. NCL/CMPT/70221, issued September 16, 2025, concerning the Exposure Margin of security under Market Wide Position Limit (MWPL), the Exchange now imposes an Additional Exposure Margin @15% in Equity Derivatives segment on securities where top 10 clients, together account for more than 20% of MWPL.

However, for securities wherein Additional Surveillance Margin (ASM) is applicable, whichever is higher of Additional Exposure Margin (AEM) as stated above or Additional Surveillance Margin (ASM) shall be levied. Scripts shall be identified under this framework based on 3 months rolling data and shall be reviewed on a monthly basis.

Why Has Additional Exposure Margin Been Introduced?

Clearing Corporations such as NSE Clearing Limited (NCL) and Indian Clearing Corporation Ltd. (ICCL) introduced the 15% Additional Exposure Margin as a strategic risk management tool to address specific vulnerabilities in the derivatives market through various parameters. One such key parameter is Market Wide Position Limit (MWPL). MWPL refers to the maximum open interest allowed in a stock’s futures and options.

What Triggers Additional Exposure Margin?

A security is shortlisted for Additional Exposure Margin when:

The top 10 clients collectively hold more than 20% of the MWPL in that security, based on 3-month rolling data, which indicates position concentration risk.

What Is Position Concentration Risk?

When a small group of participants holds a large share of derivative positions in a stock:

• Price movement can become sharp if these positions unwind.
• Liquidity may dry up suddenly.
• Volatility can spike disproportionately.
• Settlement risk for clearing corporations increases.
• Instead of allowing stress to arise, the system proactively implements increased margin requirements.

What Exactly Has Changed?

If securities meet specific concentration criteria, an Additional Exposure Margin of 15% is levied. This is applicable in the Equity Derivatives segment only.

However, if the security already attracts an Additional Surveillance Margin (ASM), whichever is higher of either, ASM or 15% AEM, will apply.

How Does This Impact Your Margin Requirement?

Earlier, you paid the standard exposure margin (plus other applicable margins). Now, if the stock you currently hold, is shortlisted under this new rule, an additional 15% exposure margin is added. Hence, higher upfront capital requirement i.e. an increase in the total margin required to hold positions.

Why Only Certain Securities?

This is not a general rise in margins for every stock. Securities enter the list when concentration crosses threshold and can exit when it normalizes. This ensures that risks are managed specifically without influencing the wider market.

Securities Identified Under the Framework:

This framework will apply immediately after the expiry of January 2026 derivative contracts. The list of securities is as follows: 

Clearing corporations publish a list of impacted securities through official circulars and annexures. Since the list is dynamic and reviewed monthly, we recommend checking the latest circular updates available on Exchange websites.

Recommendations for a Trader:

• Monitor margin requirements before initiating large derivative positions
• Track MWPL levels in highly traded F&O stocks
• Avoid over-leveraging in concentrated counters
• Review circular updates periodically

Final Thoughts

The Additional Exposure Margin framework is a preventive, risk-sensitive mechanism designed to strengthen the derivatives ecosystem. While it may increase margin requirements for certain securities, it ultimately contributes to a more stable and resilient market environment.

References:

NSE circulars:

NSE/INVG/40472 dated March 18, 2019

NCL/CMPT/70221 dated September 16, 2025

NCL/CMPT/ 71981 dated December 24, 2025

NCL/CMPT/72847 dated February 18, 2026

NCL/CMPT/72397 dated January 20, 2026

BSE circulars:

BSE Notice no: 20190318-42 dated March 18, 2019

BSE Notice no: 20260220-28 dated February 20, 2026