The Securities and Exchange Board of India (SEBI) has added diamond, base metals and alloys to the list of eligible liquid assets for the commodity derivatives segment. Currently, the list of commodities permitted as liquid assets consists of bullion, steel and agricultural commodities.
This is subject to minimum applicable haircut and concentration limits, which clearing corporations may accept from their members. The minimum applicable haircut is 40 per cent for diamond and 30 per cent for base metals and alloys. Besides, the minimum haircut stipulated for steel stands has been revised to 30 per cent from the current applicable level of 60 per cent since steel is an alloy.
The regulator further said all commodities to be accepted as collateral should be of same quality specification which is deliverable under the contract specification of commodity derivatives being traded on the exchange.