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Sebi lowers stress testing limit for commodity derivatives
Sebi on Wednesday lowered the Z-score limit for stress testing in commodity derivatives to 5 from 10, effective immediately. The move, part of the standardized framework under the Core Settlement Guarantee Fund,…
The Story in Brief
Sebi on Wednesday lowered the Z-score limit for stress testing in commodity derivatives to 5 from 10, effective immediately. The move, part of the standardized framework under the Core Settlement Guarantee Fund, replaces extreme price movements beyond the new threshold in peak historical returns. The regulator said the change aims to ease doing business by reducing compliance without undermining risk assessment. The calculation uses mean and sigma of returns over a 15-year margin period of risk.
The Indian Opinion
Some may frame this as Sebi loosening market safeguards. In reality, the regulator is trimming a compliance burden without gutting risk checks. The Z-score of 5 still flags extreme price moves; the old threshold of 10 was simply too wide for practical stress scenarios. True test: whether default fund adequacy holds steady under the new norm during volatile trading weeks.
Source: legal.economictimes.indiatimes.com
This story was synthesised by AI from the source linked above.
