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    Membership


    • The following persons shall be eligible to become Trading Member / Trading Cum Clearing member of the Exchange
      • Individuals / sole proprietors (not less than 21 years of age)
      • Hindu Undivided Family
      • A cooperative society registered with the registrar of cooperative societies of respective states/union territories
      • Association of persons
      • Registered partnership firms
      • A Limited Liability Partnership (LLP) as registered under the Limited Liability Partnership Act, 2008
      • Bodies corporate
      • A public sector organization, Government Undertakings
      • Companies as defined in the Companies Act, 1956
      • Bodies corporate statutory organization or any other Government or non-Government entity and such other persons or entities as may be permitted under the Forward Contracts (Regulation) Act, 1952
      • Any other category of persons / entity permitted to be admitted as members as prescribed by FMC from time to time.
    • The different types of membership are:
      • Trading Member(TM) : A Trading Member is entitled to trade on his own account as well as on account of his clients but takes the services of a Clearing Member for Clearing and Settlement of the trades.
      • Trading cum Clearing Member (TCM): Trading-cum-Clearing Member has a right to trade and clear through the Clearing House of the Exchange as a clearing member and who may be allowed to make deals for himself as well as on behalf of his clients and clear and settle such deals only.
      • Institutional Trading cum Clearing Member (ITCM): Institutional Trading cum Clearing Member is be allowed to trade on his account as well as on account of his clients, clear and settle trades done by himself as well as of other members of the Exchange.
      • Professional Clearing Member (PCM): Professional Clearing Member is admitted by the Exchange as a Professional Clearing Member of the Exchange and the Clearing House of the Exchange and who shall be allowed to only clear and settle trades on account of Trading-cum-Clearing members or Trading Members or Institutional Trading members.
    • The indicative main object clause to be inserted in the Memorandum of Association is:
      • To carry on the business of trading in agricultural products, metals including precious metals, precious stones, diamonds, petroleum and energy products and all other commodities and securities, in spot markets and in futures and all kinds of derivatives of all the above commodities and securities.
      • To carry on business as brokers, sub brokers, market makers, arbitrageurs, investors and/or hedgers in agricultural products, metals including precious metals, precious stones, diamonds, petroleum and energy products and all other commodities and securities, in spot markets and in futures and all kinds of derivatives of all the above commodities and securities permitted under the laws of India.
      • To become members and participate in trading, settlement and other activities of commodity exchange/s (including national multi - commodity exchange/s) facilitating, for itself or for clients, trades and clearing / settlement of trades in spots, in futures and in derivatives of all the above commodities permitted under the laws of India.
    • No, a separate entity needs to be formed for seeking the membership of commodity exchange.
    • The DPG shall consist only of individuals, not more than four in number, who collectively shall hold 51% or more of the paid up equity capital of the Member company, Limited Liability Partnership or the partnership firm, directly or indirectly. The DPG can be identified by taking the relative support and by giving an irrevocable, unconditional undertaking in the prescribed format of the Exchange which is available at http://www.aceindia.com/membership/compliance For this purpose, the term ‘Relative’ shall mean as defined u/s 6 of Companies Act, 1956.In case of subsidiary company the member may identify the DPG through the holding company and any change in shareholding pattern of the holding company which results in change in percentage/constituents of DPG requires the prior approval of the Exchange. Any change in shareholding/sharing pattern which results in change in percentage/constituents of DPG the member are required to take the prior approval of the Exchange.
    • DPG can be a combination of direct and indirect holding of DPG constituents in the member company.

      For example, in the member company M/s ABC, if 40% stake is held by Mr. P (individual) and 60% stake is held by M/s XYZ (corporate), then DPG can be identified by adding indirect stake to direct stake of the DPG constituents in the member company. However, the indirect stake would be calculated on a proportionate basis.

      In the aforesaid case, if Mr. P holds 25% in XYZ, then the indirect eligible stake would be (60 * 25)/100 = 15% . Thus the DPG would be 40% (direct) + 15 % (indirect support) = 55 %

      The DPG shareholders will have to submit corporate support undertaking for corporate support to form DPG in Member Company.
    • Prior approval for change in shareholding/sharing pattern is required wherein the changes result into change in Dominant Promoter Group (DPG). No prior approval for change in shareholding (for corporate) /sharing pattern (partnership firms) is required if such change:
      • Does not alter the shareholding/share of DPG constituents in percentage terms
      • Does not lead to addition or deletion of a DPG constituent
      • Does not result in change of management/ control.
      However, member needs to inform such changes within 21 days to the Exchange.
    • The DPG requirement is not applicable to listed companies.
    • The member has to forward a request to the Membership Department of the Exchange with covering letter and board resolution.
    • No, the net - worth of the holding company is not taken into consideration for reckoning the net-worth of the entity applying for membership

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    Collateral

    • Collaterals are assets in the form of security that are deposited / pledged / offered by a member to the Exchange towards capital / margin requirement.
    • Different types of Collateral are:
      • Cash (Fund Transfer)
      • Demand Draft/ Cheque (Subject to clearance)
      • Bank Guarantee (BGs) of the approved banks
      • Fixed Deposit Receipt (FDR) of approved banks
      • Approved equity shares
      • Approved demated commodities
    • Base Minimum Capital is the minimum amount of interest free security deposit which the member is required to place with the Exchange at the time of activation of membership. It shall be mandatory for a member to ensure that BMC is maintained with the Exchange at all points of time on a continuous basis.
    • BMC can be provided in Cash Equivalent:
      • Cash
        • Demand Draft/cheque (subject to clearance) / Fund Transfer
      • Cash Equivalent
        • Fixed Deposits Receipts (FDR) of approved banks
        • Bank Guarantee (BGs) of approved banks.
    • Member can provide the following collaterals towards ABC
      • Cash
      • Fixed Deposits Receipts (FDR) of approved banks.
      • Bank Guarantee (BGs) of approved banks.
      • Approved equity shares.
      • Approved demated commodities
    • The Bank Guarantee should be typed on a non-judicial stamp paper of value Rs. 300 or the value prevailing in the state where it is executed, whichever is higher.
    • Daily Settlement Obligation report is available to members under C&S login wherein detailed information about collaterals submitted by members is available.
    • The Exchange sends maturity reminder letters 30 days and 15 days prior to the expiry of the collateral so that member gets sufficient time to renew the collateral.

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    Fund Settlement

    • MTM means computation of notional gain / loss on open positions, at the end of the trading day, with reference to the daily settlement price of the said contract.
    • Mark to market would be computed as below:
      • On the day of entering into the contract and the position left open, MTM is the difference between the entry value and daily settlement price for that day
      • On any intervening days, when the member holds an open position, MTM is the difference between the daily settlement value for that day and the previous day's settlement price.
      • On the expiry date if the member has an open position, it is the difference between the final settlement price and the previous day's settlement price.
      MTM value for member is calculated on a daily basis.

      Example of Mark to Market profit and loss calculation
      Contract multiplier for the contract is 100

      Day and Time

      Price in Rs

      MTM – Buyer

      MTM- Seller

      Day 1 (11 AM)

      100 – Entry Price

       

       

      Day 1(End of Day)

      105

      (105 –100)*100
      =+5*100
      = 500

      		 (100 – 105)*100
      =-5*100
      = -500

      Day 2(End of Day)

      98

      (98 – 105)*100
      =-7*100
      = -700

      		 (105 – 98)*100
      =+7*100
      = 700

      Day 3(End of Day)

      102 - Exit Price

      (102 – 98)*100
      =4*100
      = 400

      (98 – 102)*100
      =-4*100
      = -400

      Cumulative MTM over a period of time

       

      (+5 - 7 +4)*100
      = 2*100
      = 200

      = (-5 + 7 - 4)*100
      =-2*100
      =-200
    • The daily profit/loss of the member is calculated using the daily settlement price/ final settlement price (on expiry). The daily settlement price/ final settlement price (on expiry) notified by the Exchange shall be binding on all members and their constituents. The daily MTM profit/loss made by the members for the day would be paid or collected by the Exchange on the next settlement day.

      The members are intimated of the next day pay in/ pay out amount through the Obligation File. The pay in amount along with the old shortages of the member will also be informed to the clearing banks.
    • The following are the tentative timings for the settlements

      Particulars

      1st Run

      2nd Run

      3rd Run

      4th Run

      5th Run

      Margin Call

       

      8:45

       

       

       

       

      ABC

      PayOut

      9:15

       

       

       

       

      MTM

      Pay In

      9:30

      11:00

      14.30(Monday to Friday)
      13.00 ( Saturday)

      16.00( Monday to Friday)

      17.00( Monday to Friday)

      MTM

      PayOut

      12:00

       

       

       

       

      Delivery Funds

      Pay In

      12:30

      15:00

       

       

       

      Delivery Funds

      PayOut

      15:30 (also supplementary pay-in / pay-out)

       

       

       

       

      Delivery Commodity

      Pay In

      12:15 (Physical)

      12:30(Demat)

      13:30

       

       

      Delivery Commodity

      PayOut

      16:00(Demat)

      16:00(Physical)

      16:30 (with held release pay out)

       

       
    • The members have to open the below mentioned accounts with any of the empanelled banks for clearing purpose:
      • Settlement Account -For daily pay in & pay out from the exchange
      • Client Account – For making and accepting pay in & pay out from the clients.
      • Own Account – For proprietary transaction
    • Yes, the clearing member can place the request for change in clearing bank. The following documents are required to be submitted to the Exchange.
      • A request from the member seeking permission to close clearing accounts with existing clearing bank and to open new clearing accounts with another clearing bank.
      • No Objection Certificate (NOC) letter from his existing designated empanelled clearing bank.
      • Once the above documents are received, the Exchange will issue an introductory letter for opening of new clearing accounts to the new bank.
    • The member can bring in funds in the multiple runs held later during the day. If the member does not settle the MTM obligation before the cut-off time set by the Exchange, the shortage would be blocked from his total available collateral.

      Due to blocking of Collaterals, the member may go in square off mode. Further if any MTM obligation is not received after completion of last MTM cycle, a penalty of 0.09% on the shortage amount or Rs 500 whichever is higher is levied to the member and member is put in square off mode.

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    Delivery and Settlement

    • On expiry of any contract all open positions are settled either by way of closing out at Final Settlement Price and/or by way of delivery. Delivery settlement is effected only when delivery is given or taken depending on the delivery option.
    • The different types of Delivery Logic are:
      • Both option
      • Seller option
      • Compulsory delivery
    • Both option based contracts are contracts in which, delivery of the commodity will take place only if both buyer and seller give their intention to give or take delivery within Exchange prescribed timeline for submission of intention.
      These contracts are also known as Intention Matching contracts.
    • A Sellers option contract is a contract in which the delivery would be based on seller's choice. If the seller member provides intention to give delivery then the Exchange will allocate the delivery to the buyer member provided the intentions are received within Exchange prescribed timeline for submission of intention.

      The buyer will have to take delivery on compulsory basis of the commodity that has been allocated to him by the Exchange.
    • Under contracts in Compulsory delivery, on the expiry of the contract all open positions of the members will result in compulsory delivery.
    • A Seller member who intends to give delivery has to provide his intention on or before the start of the tender period in case of seller option & both option contracts.

      In case of compulsory delivery contract, the seller may or may not give the intention. All the open positions will be compulsorily marked for delivery on the expiry of the contract.
    • A buyer member who intends to take delivery on a specified location can give his location preference. If the buyer gives location preference then he is prioritized and the sellers' intention received (if any) will be matched first against such buyer, who has given preference to take delivery.
    • The intention should be communicated to the Exchange through:
      • TWS
      • C & S Login
      This intention should reach the exchange within the stipulated time period.
    • Following are the different types of delivery files:
      • Delivery Obligation Quantity file: This file provides details of the matched / rejected quantity and is given on the expiry day.
      • Delivery Cash Obligation file: This file provides details of the delivery cash obligation and is given on expiry day.
      • Delivery Allocation file: This file details of pay in / pay out quantity and value of allotted ICIN and is given on Settlement day.
      • Shortage Excess file : This file provides details of total shortage / excess quantity and value from delivery allocation and is given on Settlement day.
      • Premium/Discount file : This file provide details of the total pay in / pay out amount for location and quality Premium / Discount and is given on Settlement day.
      • Initial Margin
      • Special Margin
      • Tender Period Margin
      • Delivery Period Margin
      • Additional Margin
      • Regulatory Margin
    • The amount that must be deposited in the margin account when a futures contract is first entered into is known as Initial Margin.This margin is meant to cover the potential loss in one day.This margin is a mandatory requirement for parties who are entering into the contract.
    • This margin is levied when there is uni-directional movement in the price from a pre-determined base and is typically related to the underlying spot price. The base could be the closing price on the day of launch of the contract or the 90 days prior settlement price. This is mentioned in the respective contract specification. Some contracts also have an as-deemed-fit clause for levying of Special Margins.It can also be levied by market regulator if the market exhibits excess volatility. If required by the regulator, it has to be settled by cash. This is collected as extra margin over and above the normal margin requirements.
    • It is the margin that shall be levied on contracts during the tender period as specified in the product document. The Tender Margins shall be commodity specific and forms a part of the contract specifications.
    • It is the margin which is levied on the open position that has been marked for delivery. After the delivery is marked Tender Margin is released and Delivery Margin is levied. It is levied till the time the member makes pay in of funds or commodity as the case may be.
    • In addition to the above margins, Exchange may impose additional margins on both long and short side over and above the other margins, at such other percentage as deemed fit and proper. Removal of such Margins will be at the discretion of the Exchange.
    • Any margins levied by the Regulator shall be termed as Regulatory margins. Such margins may be levied on long or/ and short side of the contract. Regulatory margins may be collected in cash. Removal of such margins shall be at the discretion of the Regulator.
    • The Exchange issues a settlement schedule on a monthly basis normally in the first week of the month. It illustrates the date and time of various activities/processes like intention submission dates, pay in & pay out dates of funds and commodities and VAT settlement dates.
    • The commodity pay in should be done on or before the scheduled pay in date. The seller has to transfer the commodity ICIN to the Exchange pool demat account before the time of schedule delivery pay in time.
    • These are the few variables that the Exchange computes at the time of the delivery. Since the actual quantity & quality may differ at the time of the delivery, the Exchange debits or credits such differences as per the schedule. The contract specification would provide the Premium / Discount, standard deduction & weight differential debit / credit provided to the member.
    • Final Settlement Price (FSP) is the rate at which the outstanding open position of members is settled on the expiry of contract. The settlement may be by way of delivery or cash. The FSP will be arrived at as per the contract specifications.
    • The Exchange identifies delivery location for commodities based on various parameters. This location is known as Delivery Centre or Base Delivery Centre and is specified in the contract specifications of commodity.
    • Additional base delivery centre is an additional delivery location apart from the base delivery centre where seller member can deliver the commodity. These are identified by Exchange based on various parameters and are specified in the contract specifications.
      • Validity date
        It is the date up to which the commodity is valid for delivery on the Exchange platform on pay in date. After the expiry of validity date, the commodity should be either withdrawn from the warehouse or further be revalidated if expiry date has not been reached.
      • Final expiry date
        It indicates normal shelf life of the commodity, i.e. the commodity will be eligible for pay in up to that particular date. After reaching the expiry date, no further revalidation will be permitted on the same commodity and therefore, the depositor/ holder of such commodities will have to withdraw the commodity from the warehouse latest by the expiry date.
    • If the seller member fails to give the delivery till the scheduled pay in time on settlement date of a contract it will be termed as delivery shortage. The Exchange will levy penalty to the member as specified in the contract specifications.
    • The charges till the time pay in is completed is to be borne by the depositor (seller) and the charges after the payout is complete, is to be borne by the buyer.
    • There are 4 steps involve in demat process:
      • The warehouse on receipt of goods and duly filled CDF (Commodity Deposit form) from the depositor enters the details in the system.
      • The designated assayer tests the goods and enters the values of parameter tested in the same system.
      • The warehouse verifies and confirms the test results by the assayer and generates the corporate action. This corporate action is sent to depositary for process through R&T agents.
      • The depositary processes the corporate action on its receipt and gives credit to the client.
    • The following type of Demat accounts may be opened:
      • Pool Account: A member pool account is a Demat account opened by the Clearing Members (TCM/ITCM/PCM). This account is opened to facilitate the pay in and pay out process.
      • Beneficiary account: A demat account to be used for transacting in commodity balances held by the account holder at the Exchange accredited warehouses.

        A Member is required to open both the pool account as well as a beneficiary account and client of the Member is required to open a Beneficiary Account.
    • Re-materialization refers to issue of physical delivery against the credit in the Demat account of a client.

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    Sales Tax

    • It is not mandatory for member/ market participant to have VAT registration. However, in case the member intends to undertake the delivery, then the VAT registration is required or alternatively a Clearing & Forwarding agent can be appointed.
    • VAT registration is to be obtained in the state where the delivery is affected.
    • VAT rates for commodities differ from state to state. Please refer to the respective state VAT laws / notifications for applicable rates
    • It is obligatory on the part of the registered seller to collect the VAT from the buyer (in case the commodity is covered under the local VAT) and file the returns as per the defined procedure of the relevant local VAT laws.

      However, in the case of commodities which are liable to be taxed on purchases only, the buyer will have to discharge the liability for payment of tax. Further, payment of VAT to the seller will be the sole responsibility of the Buyer.
    • VAT has to be paid by the buyer members on the day of VAT settlement only as specified in the settlement calendar.
    • Yes. The participants can avail of the exemptions as provided under respective State VAT laws, if any. The buyers will have to submit supporting documents / certificates / declarations prescribed under the respective State VAT laws at the time of VAT settlement. Submission of incomplete or invalid declarations / certificates shall not be considered for exemption/s. The said details of exemptions must be informed by the buyers to the respective sellers as well.
    • The files containing the amount of VAT collected/paid would be made available to the members over FTP.
    • Yes, inclusive of all taxes and levies means VAT is added in the amount traded on the Exchange platform.
    • Anugya is a settlement related document applicable to all transaction across mandis in the state of Madhya Pradesh. Anugya patra is to be provided by the seller and acts as an evidence that the necessary applicable mandi tax has been paid. For Eg in the case of "Masoor" at Indore submission of this document proves that seller had paid "Mandi tax" at Indore Mandi. Mandi tax has to be paid to the Mandi authority when the seller deposits Masoor for the first time. Depositor will get Anugya patra from Mandi authorities which are to be passed on to the corresponding buyer. In case, if both seller and the buyer are registered at same Mandi, the seller has to write Anugya patra number on the invoice which will be provided to the buyer
    • The seller party will have to issue sales tax invoice to buyer members within 5 working days from the completion of the VAT settlement date .On written intimation from buyer member for non receipts of invoice Rs 1000/- penalty would be levied for per day for each of the default after 5 working days from VAT settlement date till the date of receipt of invoice by the buyer / Exchange.

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    Technology

    • The members can use the below modes of connectivity or a combination.
      • MPLS Leased Line(wireline)
      • MPLS Leased Line(wireless)
      • Internet VPN
    • The Exchange has tied up with 3 Service Providers (SP) for providing the connectivity to the members. They are
      • Sify Technology Ltd. (Sify)
      • TATA Communication Ltd.
      • Bharti Airtel Ltd.
      The feasibility study of the last mile for the members shall be done by these SPs. Depending on the outcome of feasibility study report, the last mile from the member's premise to the nearest Sify MPLS PoP can be on Tata, Bharti, MTNL/BSNL and Sify.
    • The member has the freedom to choose the mode of connectivity with the Exchange.The Exchange recommends wireline or wireless leased line connectivity as a stable connectivity.
    • The member needs to make the payments for the connectivity in advance by Demand Draft/Cheque favoring the Service Provider.
    • The minimum PC requirement is as mentioned below

      Processor : Intel® Pentium® 4 or Intel Celeron® (or compatible) 1.3GHz processor or higher (dual-core processors and those with Hyper-Threading Technology supported)

      • Operating System: Microsoft® Windows® XP service pack 2 or Windows 7
      • RAM :512MB or above
      • Hard-Disk space: 2GB of available hard-disk space
      • Monitor: 15" Color monitor with 1,024x768 monitor resolution, 16-bit color video card
      • Internet Explorer 7 or above for CNS URL

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