What is the Tender Period?

The tender period is a specific timeframe that begins three days before the expiry of a commodity futures contract. During this period, the delivery process for the commodity begins, and additional risk management measures are enforced.

Navia Policy on Tender Period

At Navia, clients are required to close out any open positions in future commodity contracts before the tender period starts. If a client fails to close out their positions by the expiry date, Navia will automatically close these positions. The client will be fully responsible for any losses incurred due to this close-out process.

Why is an Additional Margin Charged for Crude Oil & Natural Gas Contracts Close to Expiry?

The Multi Commodity Exchange (MCX) imposes an additional margin on Crude Oil and Natural Gas contracts during the last three trading days before expiry, known as the "tender period." This additional margin, introduced from the April 2021 expiry onwards, is designed to cover the risk of significant price fluctuations that can occur as the contract approaches expiry. Refer Circular. The margin is blocked from your available funds to ensure sufficient coverage for potential market volatility during this critical period.

For more details, you can refer to the SEBI's Alternate Risk Management Framework to learn more about tender or pre-expiry margins.