What is ELM margin?

ELM Margin (Extreme Loss Margin) is a margin collected by exchanges to cover potential losses due to extreme price volatility or unexpected market conditions. It is calculated as a percentage of the trade value to safeguard market integrity and mitigate counterparty risk.

As per exchange regulations, ELM margin is applicable for expiry contracts to manage heightened risks. In Flattrade, a 2% ELM is imposed one day before the expiry of the contract, in line with our RMS (Risk Management System) policy.