Important: Beginning January 21, 2019, the requirements of Circular NCL/CMPT/39766 will take precedence.

On September 1st, exchanges, in collaboration with SEBI, issued a circular adding Additional Surveillance Margin (ASM) in addition to SPAN and Exposure. This increase in margin was implemented to protect the ecosystem in the event of market volatility.
The Initial margin, which combines SPAN and Exposure margins, now covers the risk of roughly 8% change in indices and between 12.5 percent and 30 percent movement in equities in a single trading day. Due to the aforesaid circular, the margin requirement for trading Index contracts would have increased to 10% (an increase of 2%), and the margin requirement for stocks would have increased from 17.5 percent to 35 percent by November 2018. (5 percent more).

An was accomplished by adding this extra surveillance margin (ASM) to the exposure margin, which would have resulted in no margin benefits on hedged positions. As a result, if a client held long SEPT Nifty futures and short OCT Nifty futures, the additional exposure margin increase due to ASM would be the same.
The exchanges have rectified this by updating the circular and ensuring that the additional margin increase is on SPAN. If there are holdings that risk-hedge each other, this additional margin will now be reduced on a portfolio basis. As a result, in the example above, this ASM would decrease correspondingly as the SPAN margin required for owning Long SEPT Nifty future and Short OCT Nifty future falls.
Instead of adding Additional Surveillance Margin to the Exposure Margins as specified in the above-mentioned circular dated September 01, 2018, exchanges have amended the Price Scan Range (PSR) used for computation of Initial Margins in steps (4 times) to increase the coverage of risk arising from changes in underlying Index / stocks to cover risk for a 10% change in underlying indices and a 17.50% change in underlying stocks.

As a result, starting November 30, 2018, margins for trading futures and options have increased. Make sure that your F&O positions have enough margin to cover this rise. Any margin deficiency will result in a margin shortfall penalty, which may be squared off at our Risk Management (RMS) team's discretion.