1.

What deposits does a member have to keep with the exchange and what exposure the member will get against it?

Security Deposit is given in two stages. Initial Security Deposit Its given at the initial stage which is revised from time to time when the membership is taken and is considered for giving the exposure to the members. Rs. 15 lakhs for Trading cum Clearing Member (non deposit based) and Rs. 50 lakhs for Trading cum Clearing Member (deposit based), Professional Clearing Member and Institutional Trading cum Clearing Member that is available towards exposure limit. Lock in period of 3 years.
Additional Security Deposit Member gives additional security deposit for the want of additional exposure.

 If the member maintains Rs. 50.00 lakhs in cash and gives an undertaking for the same, then he can give the BG and/or FDR of any amount, i.e. 1 : 3 ratio is not required to be maintained.
Shares of the approved companies and/or the warehouse receipts of approved commodities are accepted as collaterals for additional margins. For maximum valuation and haircuts, refer circular MCX/258/2005, MCX/319/2005, MCX/006/2006 and MCX/046/2006 or any other circulars issued subsequently in this regards. Forms of additional deposit: Bank Guarantee The bank guarantee instrument should be for a

 minimum period of 1 (one) year and a maximum period of 3 (three) years excluding claim period of minimum 45 days.
The bank on behalf of the member must issue the bank guarantee. The processing of bank guarantee instruments, its validation and upload in to the system will take at least 3 working days.

Fixed Deposit Receipts

Members may submit fixed deposit receipt (FDR) issued by the approved banks for the purpose of Additional deposit. The FDR should be

 accompanied by the bank lien and members lien letter.

The processing of fixed deposit instruments, its validation and upload in the system will take at least 3 (three) working days and therefore, the members will be entitled to get additional exposure limit at least after 3 (three) working days from receipt thereof by the Exchange, If required.

2. What are the types of margins? What is the computation methodology for it?

Different types of margins collected by the Exchange are as follows:

Ordinary (Initial) Margin: Ordinary margin requirement is calculated by applying the margin percentage applicable for a contract on the value of the open position of a member in that contract. If a member has net position in various contracts of the same commodity running concurrently, he is required to pay margin separately on each of these contracts at client level. Similarly, if a member has open position in various commodities, the total amount required is calculated as sum total of margin required in respective of each commodities and

contracts separately. The computation methodology in respect of ordinary margin is as follows: Intra day During the trading session, the margin is calculated on the absolute difference between total sales in value terms and total buy in value terms in respect of all transactions executed in a contract during the day at client level, in addition to previous days open position carried forward at the closing price of previous day. End of day At end of the trading session, the margin amount is computed at client level on net position in a contract in quantitative terms multiplied by the official closing price.

3. How do I settle my trades?

Each Trading day shall be a settlement day unless it is declared otherwise specifically by the Exchange by way of notification.
All transactions in contracts permitted on the Exchange shall be subject to marking to market and settlement through the clearinghouse, at intervals as specified. The Exchange shall have the right to effect marking to market and settlements through the clearing house more than once during the course of a working day if deemed fit on account of the market risk and other parameters. Member can settle his position by taking the opposite position. Settlement of differences due on outstanding transactions shall be made

by clearing members through the clearing banks. There shall be a daily settlement price in respect of each future contract. Positions can be settled either by way of closing it out at daily settlement price on each day and due date rate on expiry of contract and/or by way of delivery. The settlement procedures can be briefed as Settlement on MCX takes place on a T+1 basis i.e. Daily settlement or daily Mark to Market Settlement

There are two types of settlements on MCX. Marking open position of the member to the daily settlement (close) price for marktomarket settlement. Delivery settlement is effected only when delivery is given or taken during contract maturity month and closing out of residual open position at DDR depending on the delivery option.

4. What is the settlement period?

 Settlement period is the cycle, which includes trade Execution to settlement of that trade. Daily Settlement includes trades done on that day and are settled by way of MTM profit or loss on the next working day i.e. on T+1 basis.

5. What is the settlement guarantee fund?

 The Exchange maintains the Settlement Guarantee Fund. Whenever a clearing member fails to meet his settlement obligations to the Exchange arising out of the transactions, as may be provided in the Bye-Lays and Regulations from time to time, or whenever a clearing member is declared a defaulter, the Exchange may utilize the settlement Guarantee to fulfill the obligations.

6. What is Marked-To-Market (MTM) Settlement?

 MTM Settlement means that any notional and/or booked losses or profits of the members based on outstanding position at the end of a trading day and loss / gain on T + 1 day is either debited or credited to Members settlement account. Notional gain / loss on open positions, at the end of the trading day, are computed with reference to the closing price of the said contract with the traded price of the contract.

7. What are special margins? When are they levied?

 Special Margin: In case the price fluctuation in a contract during the trading session is more than 50% of the circuit filter limit applicable on that contract compared to the base price of the day, a special margin equivalent to 50% of the circuit filter limit or as specified by the Exchange is applied. Such special margin amount is immediately reflected in utilized margin of the members having outstanding position in that contract and in case the available margin of a member is not sufficient to cover such special margin required, then a margin call is sent to the member which is required to be remitted by the member immediately. In such case, since the available deposit is already exhausted, he is put in square off mode and the same continues during such trading session till collection of required margin

 amount is completed or member squares off his position. Tender Period/Delivery Period Margin: - When a contract enters into tender period/delivery period towards the end of its life cycle, tender period margin is imposed. Tender margin is levied as defined in the contract specification and is applicable on both outstanding buy and sell position, which continues up to the marking of delivery obligation or expiry of the contract, whichever is earlier. The delivery period margin is levied on the marked quantity and is calculated at the rate specified for respective commodity multiplied by the marked quantity at the expiring contract. When a seller submits delivery documents along with surveyors certificate, his position is

 treated as settled considering early pay-in and his tender period/delivery period margin to such extent is reduced. When a buyer pays money for the delivery allocated to him, his delivery period margin is reduced on such quantity for which he has paid the amount. If delivery does not happen with respect to certain open position and is finally settled by way of difference as per the Due Date Rate, the delivery period margin is released only after final settlement of difference arising out of such closing out as per the Due Date Rate.

8. How can I increase margin?

 The margin can be increased by giving Cash / Bank Guarantee / Fixed deposits as additional security deposit. Shares of approved companies in Demat form with the custodian and the warehouse receipts of approved commodities are also accepted as collaterals towards the additional margin requirements. (Refer relevant circulars)

9. How to release margin / Additional security deposit?

a.
b.

The member can release only that margin which is given as an additional deposit.
In case a member intends to get his additional security deposit released to him during its tenure or on its maturity, he shall inform the Exchange at least one week in advance. The Exchange subject to clearance of Exchange dues will consider any request for withdrawal of the additional security deposit. Request for release can be considered only when the member has not utilized such deposit / amount for margin at the time of release.

c.

d.

10. When does pay-in and payout occur?

 Pay in & payout of funds for Mark to Market Settlements is effected on T+1 basis. It means that any booked losses or profit of the members are debited or credited in their bank settlement account on the next day of its trading.
Pay in & payout of funds for delivery-based settlements is effected on E+2 / E + 3 (E stands for expiry of contract) basis for delivery of good delivery by the seller or as prescribed in the contract specification.

11. What is maximum level of mark to market loss allowed by member?

 The maximum level of mark to market loss allowed to a member is 75% of his total eligible deposit. The moment a member crosses this limit the trading terminal is automatically put in square off mode.

12. What should a member do if he has utilized 100% of his margin?

When a member utilizes 100% margins, he has the following options: Deposit additional margin in his settlement account & inform the exchange to debit it, thereby increasing his exposure.

Or
Square off existing positions thereby liquidating and hence releasing margins. Members can square off their positions from their terminals as, on utilizing 100 % margins, the member is put in square off mode.

13. Where can I see my Mark-To-Market Profit?

Mark-To-Market profit or loss can be seen on the TWS online and can also be taken from the Net Obligation Report, available on the FTP server at end of each trading day.

14. Can my Mark-to-Market Profit be added to my Margin account?

 No. Mark-to-Market Profit is Members Settlement Account.

credited

to

15. How to get spot prices of various commodities?

 Spot price of the commodities permitted for trading is disseminated by the Exchange on the Traders Work Station (TWS) of the members, and can be viewed in the column Underlying Asset in Market Watch Screen.

16. How do I get historical data of commodities traded on MCX?

 Historical data like open, high, low & closing price volume and open interest is available in the Bhavcopy report being sent at 17 hrs and after 23.30 hrs on daily basis. This information is available in the website (www.mcxindia.com) before the beginning of trading during the following day. It is available in the link Bhav Copy (Date Wise) & Bhav Copy (Commodity Wise).

17. How will various charges (viz. user id charges, transaction charges etc) be collected from me?

The charges are reflected in obligation report of the members.

daily

The Exchange debits these charges to the settlement accounts of the members periodically.

18. When can a member access the extranet (FTP server)?

 A member can access extranet (FTP) server anytime during a day through internet and during non-trading period through the leased line and VSAT.

19. Which securities can be given as collateral?

 The list of equity shares acceptable towards additional security deposit as collaterals for increasing the trading limits is given in circulars issued by the exchange (Refer circular no. MCX/337/2005 & MCX/047/2006).

20. Which are the clearing banks in which settlement A/c can be opened?

21. What are the applicable transaction charges for trade volume on MCX?

22. What are the stamp duty charges?

 The Stamp duty is payable on all futures contracts by the members as per State Government requirements.

23. What end of day reports is sent to members?

Exchange is providing the following reports to the members at the end of the trading day on Extranet (FTP Server) Bhav Copy:Daily Price List. Obligation report:-Daily pay-in and payout of a member and details of previous days open position Trade file:Daily trading details Position file:Details of end client level open position Margin:Margin details.