How much margin is applicable in the commodities market? How is it arrived at?
As in stocks, in commodities also the margin is calculated by VaR system. Normally it is between 5-10% of the contract value. The margin is different for each commodity. Just like in equities, in commodities also there is a system of initial margin and mark-to-market (MTM) margin. The margin keeps changing depending on the change in price and volatility.
