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COMMODITY FUTURES RELIGARE COMMODITIES LIMITED

Turnaround
The entire commodities complex is now the focus of attention not only for entrepreneurs (producers, consumers) and investors but also of policymakers, including central banks Investment in commodities exerts a balancing effect on the portfolio as it provides a natural hedge against possible decline in the value of other assets Central banks of all major countries are investing in Gold on large basis, For instance, Asian central banks together hold foreign exchange reserves totaling over $2 trillion, with China alone accounting for $1 trillion and India amounting $ 9.558 billion Crude is increasingly becoming a strategic asset for producers and consumers with energy security today perceived as critical Furthermore, a boom in construction and infrastructure activity fuelled interest in steel and other base metals in rapidly growing economies such as India and China, resulting in a surge in interest in the Indian commodity market The commodity prices do drive the equity market also as there is impact on share prices due to change in the commodity prices

Benefits Of Commodity Futures


Diversification of Portfolio Low Margins High leverage for traders Domain knowledge helps to take sound decision Hedging/ Arbitrage opportunities Price Discovery: Risk Transfer Short Selling Hassel free trading Option of trading in Demat form Extended trading Hours

Introduction

Introduction
A Financial Instrument that derives its value from an underlying security An easy way to explain derivatives is as a side bet on interest rates, exchange rates, commodity prices The term "Derivative" indicates that it has no independent value, i.e. its value is entirely "derived" from the value of the underlying asset. The underlying asset can be securities, commodities, bullion, currency, live stock or anything else There are four different types: Forwards Futures Options Swaps

Continued
Forwards: The agreement to pay for and pick up, Something at a predetermined date and or time, for a pre-determined price. Usually traded off of the trading floor between two firms. These are the customized contracts between the two parties. These are traded in OTC markets Futures: These are type of forwards contracts only as they specified date and time along with the quality and quantity specifications. These are the standardized contracts traded on exchange. Only prices can be changed Options: An OPTION is the right, not the obligation to buy or sell an underlying instrument. The most common options are put and call. Swaps: These are the instruments which you find in interest rates and currency. Its simply swapping of different derivatives

What are Commodity Futures?

A commodity futures contract is: a firm commitment to deliver or receive a specific quantity of a commodity during a designated month at a price determined by open auction on a future exchange a legally binding agreement to buy or sell the underlying on a future date they are the organized/standardized contracts in terms of quantity, quality, delivery time and place for settlement expires on a pre-specified date called the expiry date of the contract, on expiry futures can be settled by delivery of the underlying or cash

When It Was Started?


Pre 2003: Internationally started first on CBOT in 1848 for Cotton Futures In India firstly Bombay Cotton Exchange was established in 1893 Then in 1900 Future trading in oilseed started with the establishment of the Gujarati Vyapari Mandali, which also carried on future trading in groundnut, castor seed and cotton But the most notable future exchange for wheat was chamber of commerce at Hapur set up in 1913 Future trading in bullion began in Mumbai in 1920 and so on many regional Exchanges were formed for Specific commodity Trading
NOTE: But all this was at very narrow level due to British Rule, till 2003 nothing major happened, except those traders and producers used to participate in the market. It was more of forward market set up

Continued
Post 2003: After formation of Kabra Committee new electronic trading platform was formed MCX, NCDEX and NMCE are three national level Electronic Exchanges were formed This opened trading into commodity futures for every type of investors Now commodity market has broadly two type of structures: Future market includes FMC, MCX, NCDEX, NMCE, NBOT or all other Regional exchanges. Spot market includes all government authorities, producers, manufacturers, consumers in the form of Mandi.

Structure of Futures Market

Regulatory Authority

FMC

Exchanges

National

Regional

NCDEX

MCX

NMCE

NBOT

Regional Exchanges

Structure Cont
FMC Managed By Ministry of Consumer Affairs and Public Distribution, Govt. of India. Set up in 1953 under the Forward Contracts (Regulation) Act, 1952. Currently Mr. Ramesh Abhishek, is the Chairman of FMC MCX Promoters : Financial Technologies (India) Ltd., SBI, NABARD, NSE, HDFC, State Bank of Indore, State Bank of Hyderabad, State Bank of Saurashtra, SBI Life Insurance Co. Ltd., Union Bank of India, Bank Of India, Bank Of Baroda, Canara Bank, Corporation Bank. It commenced its operations on 10th November 2003 Headquartered in Mumbai, MCX is led by an expert management team . NCDEX Promoters - ICICI Bank, LIC, NABARD, NSE Punjab National Bank (PNB), CRISIL Ltd, Indian Farmers Fertilizer Cooperative Limited (IFFCO) and Canara Bank It commenced its operations on December 15, 2003. NCDEX is located in Mumbai and offers facilities to its members in more than 390 centers throughout India.

MCX - Working
MCX is an independent and de-mutulised multi commodity exchange. It was inaugurated on November 10, 2003 Headquartered in the financial capital of India, Mumbai MCX features amongst the world's top three bullion exchanges and top four energy exchanges. MCX currently facilities trading of around 65 commodities, few of them are Gold, Silver, Crude Oil, Lead, Copper, Nickel, Cardamom, Rubber, Zinc etc. The trade timings of the MCX are 10.00 a.m. to 11.55 p.m. MCX has various strategic Memorandum of Understandings/ Licensing Agreements with global exchanges like The Tokyo Commodity Exchange (TOCOM); The Baltic Exchange, London; Chicago Climate Exchange (CCX); New York Mercantile Exchange (NYMEX), London Metal Exchange (LME); Dubai Multi Commodities Centre (DMCC); New York Board of Trade (NYBOT) and Bursa Malaysia Derivatives, Berhad (BMD)

NCDEX - Working
It is a public limited company registered under the companies act, 1956 with the registrar of companies, Maharashtra in Mumbai on April 23, 2003. NCDEX currently facilities trading of around 54 commodities few of them are Chilli, Jeera, Mentha Oil, Rmseed, Castor Seed, Pepper, Soybean, Refined Palm Oil and Cotton-medium and long staple varieties. The trading system on the NCDEX provides a fully automated screen-based trading for futures on commodities on nationwide basis as well as an online monitoring and surveillance mechanism. The trade timings of the NCDEX are 10.00 a.m. to 5.00 p.m. The NCDEX system supports an order driven market, where orders match automatically. Order matching is essentially on the basis of commodity, its price, time and quantity.

Major Commodities Traded


BULLIONS: Gold, Silver BASE METALS: Steel, Nickel, Tin, Copper, Zinc, Aluminium SPICES: Pepper, Red Chilli, Jeera, Turmeric, Cardamom ENERGY & Gas: Crude Oil, Brent Crude Oil, Natural Gas OIL & OIL SEEDS: Castor Seeds, Soy Seeds, Mustard Seeds FIBRE: Kapas, Cotton PULSES: Chana, Yellow Peas, PLANTATIONS: Cashew Kernel OTHERS: Guar Seed, Gur, Sugar, Guargum, Mentha Oil etc.

Why Commodity Futures?


The main purposes are: Futures provide producers, farmers, and end users with the opportunity to hedge their position against large price swings and potentially large losses Liquidity and volatility gives the Day traders an opportunity to earn on the basis of trend in the market For real time Investors its an opportunity to earn like in Gold, Silver Main Participants in Futures Market: Hedgers (Farmers and Commercials) trade futures to reduce risk Large Speculators (brokerage houses) trade both their own accounts and their clients accounts to capitalize on price swings Small Speculators (Investors) trade futures to capitalize on large moves in the direction of their position Arbitragers work at making profits by taking advantage of discrepancy between prices of the same product across different markets

Key Drivers In Commodity Futures!


Volatility: Commodity Derivatives feed on volatility!" Liquidity: Commodity Derivatives markets cannot function properly without sufficient liquidity - easy entry and easy exit Hedging: Risk-avoiding strategy to protect position values Speculation: Risk-taking, dynamic investing strategy to generate high returns Arbitrage: Risk free, profit-seeking strategy from temporary price distortion Symmetry: Long vs. Short - A Zero-sum Game!

Opportunities In INDIA

Opportunities In India
Huge demand surge for food, energy, metals; supply growth trails demand growth; Free trade and integration with global market heightens risk perception; Huge economic interest in commodities emerging; It is coming up as an most return giving asset class due to its liquidity, Huge appetite for speculation; equity players expand into commodities; more liquidity; Expansion of commodity trade; competition from imports; role of MNCs; dominance by a few large firms; stronger cash market;

Opportunities In India.Cont
Worlds second largest silver exchange after NYMEX Worlds third largest gold exchange after NYMEX & TOCOM Two national level agri marketing and infrastructure initiatives National Spot Exchange for Agricultural Produce and National Bulk Handling Corporation First gold ETF launched Amendment to FCRA Banks, MFs, FIIs will be soon allowed to trade commodities; government has to take final nod for the same.

Concepts In Commodity Futures!!!


A good-faith deposit made by the traders to ensure the completion of the contract. set the initial and maintenance margin requirements upon which brokerage houses set their own margins. Typically 8-20% of contract amount is kept Initial Margin: The amount a futures market participant must deposit into his/her margin account at the time he/she places an order to buy or sell a futures contract. Maintenance Margin: A set minimum margin (per outstanding futures contract) that a customer must maintain in his margin account. 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 is applied. Delivery Period Margin: When a contract enters into delivery period towards the end of its life cycle, delivery period margin is imposed. Such margin is applicable on both outstanding buy and sales side, which continues up to the settlement of delivery obligation or expiry of the contract, whichever is earlier

Continued
Mark to Market Daily Profit/Loss Recognition As the day's trades are completed, all futures contracts are marked to the market at the settlement price, i.e. (futures = a series of one-day forwards) While the credited profits are withdrawable, the trader must replenish the account if it falls below the maintenance margin Margin call, when the market moves against the position by Initial Margin -Maintenance Margin + 1 tick Volume The number of purchases or sales of a commodity futures contract made during a specified period of time, often the total transactions for one trading day. Lot Size Its the minimum quantity of any commodity which is being bought or sold in the exchange. e.g. Minimum you can trade in 1 MT Coffee

Continued
Open Interest The total number of futures or options contracts of a given commodity that have not yet been offset by an opposite futures or option transaction nor fulfilled by delivery of the commodity or option exercise. Each option transaction has a buyer and a seller, but for calculation of open interest only one side of the contract is counted delivery The transfer of the cash commodity from the seller of a futures contract to the buyer of a futures contract. Nearby (Delivery) Month The futures contract month closest to expiration. Also referred to as spot month high This the maximum price which is being traded on exchange for a particular commodity in a day Low This the minimum price which is being traded on exchange for a particular commodity in a day

Continued
Expiry This is the maturity date of a contract or contract ending date delivery Unit Its the unit on which a particular commodity will be delivered on the exchange. e.g. Silver will be delivered in Kgs only price Tick Its the minimum movement in the price of a particular commodity. e.g. There is minimum on Rs 1 movement in Gold or in that multiples only Average Traded Price This is the average of the prices which is being traded in a day Opening Price This is the price on which the day trading starts in a particular commodity on the exchange Closing Price This is the average of last half an hour prices of the trading session in a day

Delivery & Settlement


MTM settlement which happens on a continuous basis at the end of each day, MTM settlement in respect of admitted deals in futures contracts are cash settled by debiting /crediting the clearing accounts clients. All positions, either brought forward, created during the day or closed out during the day, are market to market at the daily settlement price or final settlement price at the close of trading hours on a day. Final settlement which happens on the last trading day of the futures contract. On the date of expiry, the final settlement price is the spot price on the expiry day. The responsibility so settlement is on a trading cum clearing member for all trades done on his own account and his clients trades. A professional clearing member is responsible for settling all participants trades which he has confirmed to the exchange. .

Procedure
On the expiry date of futures contract, members submit delivery information delivery request window on the trader workstations provided by exchange for all open positions for commodity for all constituents individually. Exchange on receipt of such information matches the information and arrives at a delivery position for a member for a commodity The seller intending to make delivery takes the commodities to the designated warehouse. These commodities have to be assayed by the exchange specified assayer. The commodities have to meet the contract specifications with allowed variances. If the commodities meet the specifications, the warehouse accepts them. Warehouse then ensures that the receipts get updated in the depository system giving a credit in the depositors electronic account. The seller then gives the invoice to his clearing member, who would courier the same to buyers clearing member. On an appointed date, the buyer goes to the warehouse and takes physical possession of the commodities.

Hedging In Commodity Futures


Method of reducing the risk of loss caused by price fluctuation. It consists of the purchase or sale of equal quantities of the same commodities in two different markets at approximately the same time, with the expectation that a future change in price in one market will be offset by an opposite change in the other market. E.g. a grain-elevator operator may agree to buy a ton of wheat and at the same time sell a futures contract for the same quantity of wheat; when the wheat is sold, he buys back the futures contract. If the grain price has dropped, he can buy back the futures contract for less; his profit from doing so will be offset by his loss on the grain. Price risk can occur for a number of reasons, for agricultural commodities, price risk may occur due to drought, near record production, an increase in demand, decreased production, etc. Hedge covers price risk but it can not cover the Basis risk (difference of cash and futures price at one point)

Types Of Hedging
Long Hedge This requires taking a long (buy) position in the futures contract. Appropriate when a certain asset or commodity would be purchased in the future and one is interested in locking in the price now e.g. If a person is going to buy a commodity in the cash market at a later time, his first step is to buy futures contracts. Short Hedge This means taking a short (sell) position in the futures contract. e.g. If a person is going to sell a commodity in the cash market future and anticipating the future prices will drop then his first step is to sell futures contracts. Cross Hedge Cross Hedge is used to hedge price risk of different commodities Hedging and cross hedging should only be attempted if the price movements are similar and basis risk is acceptable to the hedger

Arbitrage In Commodity Futures


An arbitrage technique in which a trader buys one commodity and sells another contract of the same commodity to capitalize on a discrepancy in prices. The simultaneous purchase and sale of an asset in order to profit from a difference in the price. This usually takes place on different exchanges or market places or contracts. Also it is known as a "risk less profit".

Types Of Arbitrage
Inter- Exchanges Between two exchanges like MCX and NCDEX Inter Commodity Between two commodities of good correlation like Soya bean and Soya oil Intra Commodity - Calendar Spread Between two contracts of the same commodity, Cash and carry Between the spot market and the future market. Or Carrying the positions in futures market by taking and giving the deliveries

Examples.
Inter- Exchanges Buying 1 lot Gold on MCX and at the same time selling it on NCDEX at a particular difference and exit it after the particular target difference is achieved. Important is that the contract months and the lot sizes of the commodity should be same Inter Commodity As soya bean and soya oil has correlation equal to 1. So buying one lot of Soya bean and selling one lot of Soya oil on NCDEX at a particular difference and square off the position after the target difference is achieved Important is that maturity dates and the correlation should be there between the commodities

Examples. Cont
Intra Commodity - Calendar Spread Buying one contract of Jeera and selling another contract on NCDEX at a particular difference and exit it after the particular target difference is achieved. Important is the underlying asset should be same or the commodity should be same Cash and carry Buying sugar in spot and selling sugar on NCDEX at a particular difference when the future prices are more than spot prices Another is firstly taking the delivery in Jeera on NCDEX and then giving the delivery on same in far month contracts Important is that the basis risk should be considered i.e. futures should be more than cash price

Trading Procedures and Formalities

Procedure for Trading


The client trading account is opened first all the requirements for opening the account has to be met by the client After this a unique code or CRN is issued to the client along with the password Then the client can start trading by depositing the margin amount appropriate to take position in futures contract The client can trade through his own terminal installed by Religare or through the Dealers assigned by Religare The client can go for simple day to day trading or special position taken according to their business requirements The MTM system is maintained in the clients account according to the time and quantity in the futures contract On the basis of MTM and the position carried forward, pay ins and pay outs are done

Trading
After the code is issued the client has to deposit the margin money with Religare to start of with trading The client has to put that much money as per the percentage given by the exchange to maintain the VAR for trading futures The amount will be equal to the percentage of total value of the contract in rupees This can vary between Rs. 1,000 to 1,00,000 approx per lot as per the commodity you are trading The % varies from 4% to 30% for different commodities Special Privileges for Calendar Spreads as per Exchanges guidelines

Trading Process
The client can trade either directly through the terminal at his place installed by Religare or with the help of Dealers and RMs assigned by the Religare specially for the client for hassle free trading The client will be informed on the daily basis about the position or trades they have done The MTM reports and contract notes is sent on daily basis through email or post The dealers do the trade confirmations and the price tracking on the behalf of client There is constant tracking and check on the clients account positions and trades The trades can be on the day to day basis or on the contract period like roll over/cash and carry, hedging, arbitrage etc.

Accounts Maintenance
MTM settlement which happens on a continuous basis at the end of each day, MTM settlement in respect of admitted deals in futures contracts are cash settled by debiting /crediting the clearing accounts clients. All positions, either brought forward, created during the day or closed out during the day, are market to market at the daily settlement price or final settlement price at the close of trading hours on a day. Daily check on margins Initial margin Intraday margin End of day margins Special & Additional margins

Example Daily Settlement


Today one lot (100 Barrels) of crude oil bought at the rate of Rs. 4750/Barrel Margin [5% of total value Rs. 4,75,000(4750*100)] i.e. Rs. 23,750 for one lot Suppose next day crude oil falls by Rs. 1 then there will be loss of Rs. 100 on one lot As per MTM settlement Rs. 100 has to be put in the account to maintain the position On the third day it increases by Rs. 2 then there will be profit of Rs 200 on one lot As per MTM settlement Rs. 200 can be withdrawn from the account as profit There is also provision of carrying of short positions, which means instead of buying first sell the commodity and buy when it comes down to earn profit

Why Us?
Brand & Corporate Parentage Professional Management Understanding of the dynamic needs of the market Credible Research & Analysis on major commodities Nation wide presence through Branches and Mandi Locations State of the art infrastructure & connectivity Providing Trading Terminal, trader can trade from any nook or corner of the world Margin Trading Transparent Accounting System and any time pay in/pay out facility Portfolio construction in organized manner leading to effective diversification Transporting Reporting: Portfolio Information available online Pre - Trade and Post - Trade confirmation of transactions Dedicated Customer Care Desk

Think and Act!


Now you have seen how Commodities market is evolving worldwide especially the Commodity Derivatives market in terms Profits Risk Mitigation Tool Risk Diversification Expansion Globalization Booming Career In all Economy Savior

A/c Opening -Issue of Code/CRN


The client is issued a unique code and customer registration number through which he is indentified in the Religare records and on the basis of same the books will be maintained After this the terminal can be installed at the client place through which he can trade or keep track of the prices and position taken in his account The client can view the books online also through the CRN and password issued on the Religare online portal, which covers payment system, contract notes, financials, ledgers, pay ins & pay outs etc. Religare will provide the following facilities: 2-3 Dedicated Dealers Mobile phone with installed trading software Online trading platforms for the live tracking of the market Back-office support for all trade queries Mode of connectivity will be a choice and cost will be a part of client VSAT, Broadband or VPN 24 hour customer care for support on any kind of trading related queries.

Payment System
The payments are made in the account mentioned by the client while opening of the trading account The pay outs are made according the clients position and margin required for it The pay out is made on the same day basis if its an electronic transfer otherwise three working days in case of cheques or DDs The pay outs are done through the following modes Cheques Pay orders Issuance of demand drafts. Funds transfers. RTGS

Payment SystemCont
The client has to deposit the money on the basis of MTM requirements It should be done on immediate basis or on the same working day The margin can be paid through following: Cash Fixed Deposits Warehouse Receipts for Margin Funding The client can give the scanned copy of any if hard copy cannot be sent directly on the same day The electronic transfer facility is also there There are 16 different modes of payments through different banks which includes HDFC Transfer Citibank Cheque KVB Cheque HDFC Cheque ICICI PGP UTI Transfer HDCF PGP Corp PGP PNB Transfer ICICI Transfer KVB PGP IDBI Cheque Citibank Transfer PNB Cheque ING Vysya PGP SBI DD SBI Transfer SBI PGP

Risk Management Cell (RMC)

Identification of Risk in Commodities Market


Live Market Risk: Risk arising out of the clients inability to pay his / her obligations arising out of loss sustained in market. Compliance related Risk: Arises due to the failure of Member to comply by the Rules and regulations as prescribed by the governing bodies of the market as Exchanges (NCDEX/ MCX/ NMCEIL) or regulatory body as FMC. System related Risk: Risk arising out of the technology related failures or operational mechanism of a company handling the work of day in and day out breaks down leading to potential losses. Important: RMC strives its best to have a disaster management contingencies ready to counter the exigencies arising out of any of the above identified Risks.

Margin Report
Definition: Report that summaries the financial health of a clients trading a/c with Religare by comparing its collateral security with the Margin utilizations and Mark-To-Market obligations updated as per the information available till the end of last trading session. It is posted on the website in the morning of the next trading day. Trading commences based on the parameters of the last Days Margin Report. Structure of Margin Report:
Client Code Group Name Client Name Financial Stk AH Cut Accepted Net Additiona Undercle Bill Collaterals Available l Cash aring Margin Margin Margin Funds Utilized Margin Available Margin%

Total Stock MTM for Derivative Shortage Uncleared B.H-Cut the day Exposure Funds

Trade Facilitation
Allocation of Client-wise Trading Limit: Deposit = Available Margin [As per Last Days Margin Report] Normal Clients Exposure 25 Times, Margin Multiplier 1 Times & MTM tracking at (50%) of the client deposit. Premium Clients Exposure 25-50 Times, Margin Multiplier 1 to 3 Times MTM tracking (30%) to (50%) of client deposit. Important:
Limits for premium clients are updated into the system as per the Margin Multiplier requested by the branch duly approved by the approving authority. By default a client is allocated limit as per the Normal Client scheme.

Future Position Uploading on Trading Platform . Positions of clients are uploaded onto the trading system on any one Dealer ID of the branch the client belongs to. These positions can be seen by the branch and the online Diet Clients. All the positions uploaded into the system utilizes the margin equivalent to the Span Margin which is fed in the system.

Risk Management Policies


Its Mandatory to have a trading margin to commence the business. Limits against cheques upto Rs.25000 and DD upto Rs. 50000 given upfront. RMC reserves the right to withdraw this facility in case of select branches / clients wherein credible response is not found. Limits against cheques in excess of Rs.25000 given only against DD / online transfer / cheques of HDFC, ICICI, BOR, UTI & PNB. Terms of Intraday Limits: Message flashed to clients having O/S intra day positions 30 minutes before the close of the market. Premium Clients intra day positions to be Squared off before 30 minutes from the close of market by the concerned dealer / client. Otherwise excess position may be squared off by RMC. In case, due to some reasons the positions are not squared off then intraday limits would not be allowed to such clients on next day. Further, if due to certain circumstances Intra-day positions are carried by such clients on five & more occasions then intra day limits are permanently stopped.

Risk Management Policies


Approval for Approval Type Margin Multiplier Allowing Limit against Payment Commitment Against Same City Clearing Cheque Upto 25k Holding Position in case of Short Margin Against Same City Clearing Cheque Upto 25k Allowing to go into Naked Debit against Committed Payment Against Same City Clearing Cheque Nil

Hierarchy Dealers / RMs Branch Managers Area Heads / Zonal Heads / Product Managers

MCX + NCDEX Upto 1 time

Against Fund Trf mode / DD Upto 50K

Against Fund Trf mode / DD Upto 50K

Against Fund Trf mode / DD Upto 10k

Upto 1.5 times

Upto 1 lac

Upto 50k

Upto 1 lac

Upto 50k

Upto 50k

Upto 10k

Upto 2 times

Upto 5 lac

Upto 2 lac

Upto 5 lac

Upto 2 lac

Upto 2 lac

Upto 50k

Regional Heads

Upto 3 times

Upto 10 lac

Upto 5 lac

Upto 10 lac

Upto 5 lac

Upto 5 lac

Upto 2 lac

Business Heads / Head Office Management

Above 3 times

Above 10 lac

Above 5 lac

Above 10 lac

Above 5 lac

Above 5 lac

Above 2 lac

Note: All approvals are subject to approval from Head Office Risk Management Cell. No approval will be granted on permanent basis and will be subject to periodic quarterly revision.

Margin Maintenance
Intimation About Margin Report: Margin report is sent around 8:00 a.m. daily through mail as well as uploaded onto our website i.e. axis.religare.in and also mailed to the concerned branches Dealers and RMs. The Branch / BP are expected check the daily margin file & send client wise replies through mails w. r. t. their shortages. Replies Against Cases of Margin Shortfall: Up to 10% Shortage in Margin i.e. (90% of Available Margin%) is considered ignorable and the clients trading rights remain as per the approved multiplier of the available margin. Between 10% to 30% i.e. (Between Available Margin% of 70% to 90%) , the concerned branch /BP is asked to collect the payment against short margin by 11.30AM. More than 30% i.e. (Available Margin % less than 70%), the concerned branch/BP is asked to provide the payment (with proofs) against short margin or ask to reduce proportionate position to bring to comfortable margin. If the branch does not take any action then RMC may reduce the client positions before the end of trading.

Margin Maintenance . Cont


In Case of During the Mark-To-Market Losses: First Margin Call: Intimation at 30-50% MTM Loss for fund arrangement. Second Margin Call: On 50% or more MTM loss RMC flashes the message for reducing position at branch / BP level. Only payments by way of DDs / online transfers / transfer cheques are accepted in case of MTM loss exceeding 50% of Available Margin. Positions may be reduced by RMC after second flash if no action. RMC flashes squared up rate on trading terminal of client and the same is conveyed to the concern branch by mail or phone.

EXPIRY CONTRACTS
Blocking of Expiry Contracts which are in Compulsory Delivery. In Normal market condition, RMC will block such expiring contracts by 4.00 p.m. & 10.30 p.m. of the Expiry day just preceding the date of starting delivery period. Compulsory delivery positions allowed only where mandatory documents & funds required are available. Blocking of Expiry Contracts which are in Both or Seller option. RMC to block trading in such expiry contracts 5 days preceding the Expiry Day & the clients would be able to square off their outstanding positions once the contract goes into intention period.

ILLIQUID COMMODITES CONTRACTS


In order to prevent the client from participating in illiquid contracts (Due to various reasons as Trade Matching resulting in enquiry from Exchange / Unreasonable Loss due to price differential in case of Error trade), RMC blocks all such Contracts which meets both of the below mentioned criteria: 1. Open Inter set at Exchange Level is less than 3 crore in Value. or Open interest at Exchange Level less than 300 lots. 2. Last Days Trading volume less than 100 lots. or Trading volume is less than 1 crore.

Compliance
Trading related compliances. Ensuring that all clients trading on Religare Platform must have PAN details. All the CTCL dealing terminals running in Religares network must be issued on the name of individuals having valid NCFM certification. Ensuring trading is conducted within the Exchange specified Member level and Client level limits. Clients comes in suspended mode, if he/she remains inactive since last 6 months or more. Coordinating with Exchange in regard to other compliances and furnishing data.

Member Level Limits


Exchange has specified quantity limit for every trading member in all contracts traded. In case of violation of such member level limits, the members terminal is suspended. In order to avoid occurrence of such instances of violation, RMC has its policy in place.

RMC distributes the member level limits to the various trading servers of Religare and defines the member level limit in each contracts.

Demands from various regions are considered while allocating such limits on to the server.

Client Level Limit


As member level, contract wise quantity limit has been defined by the exchange at client level as well. In case of violation of client level limit by a trading client (Individual or Corporate), the client will be liable of penalty equivalent to 2% of the value of contracts violated (in exposure Terms). In order to avoid the occurrence of such violations, RMC has its policy in place. In case of all clients with Net Available Trading Deposit > 1 Lac, Limits are defined at the client level surveillance check across all contracts. Dealers / RMs handling the clients trading A/c are informed regarding the clients position held when the client crosses 80% of the Exchange allocated position limit in the specific future contract. Note: Client level limits can be relaxed by exchange in case of hedgers on furnishing of
stocks of underlying with matching quality specification in case of trading individual involved with trading of underlying in spot market.

Important: ODIN Trading system


Rejection and limits are most concerned issue for branches. Other than those position, orders, trades and mtm can be checked from the branch terminal also like the admin terminal except diet clients days activity. By checking the rejection, reason of rejection can be determined. Examples are following :
Rejection due to closing of contract. SURVEILLANCE FAILED ORDER : For KT256, Client Order No : 00055,Order Number : 0 SELL 1 FUTCOM LEAD 30NOV2007 XX N at Rs.147.95 For CLI KT256 ADMIN PENDING -New Positions for given scrip are not allowed for member Member level rejection Order Number : 0 SELL 3 FUTCOM JEERAUNJHA 20DEC2007 XX N at Rs.10679.00 For CLI NC41 ADMIN PENDING Order failed Net Sale Exposure check where the limit is 2852770.00, prev. utilized was 2574120.00 and current value is 2894490.00 for JEERAUNJHA XX of Futures ( NDX-Expiry) of member Rejection on client margin limit in MCX Order Number : 0 BUY 1 FUTCOM COPPER 30NOV2007 XX N at Rs.313.00 For CLI N112169 ADMIN PENDING Margin Limit exceeded.Set= 1.00,Used = 18780.00(I)(Prev= 0.00)[UsedIM= 18780.00,PrevIM= 0.00,EM= 0.00,MTM= 0.00,B.PL= 0.00] across all securities of Futures ( MCX-Expiry) of N112169 Rejection on client level on exposure for MCX+NCDEX combined 3 Order Number : 0 BUY 1 FUTCOM COPPER 30NOV2007 XX N at Rs.312.55 For CLI DC687 ADMIN PENDING -Order failed Gross Exposure check where the limit is 1500000.00, prev. utilized was 1434330.00 and current value is 1746880.00 across all securities of Combined Commodity (Expiry) of DC687 Rejection on client margin limit in MCX+NCDEX combined Order Number : 0 SELL 10 FUTCOM RMSEEDJPR 20NOV2007 XX N at Rs.450.00 For CLI MC92 ADMIN PENDING Margin Limit exceeded. Set= 118766.00,Used= 236584.58(I)(Prev= 23996.26)[UsedIM = 247944.58,PrevIM= 235356.26,EM= 0.00,MTM=11360.00,B.PL= 0.00] across all securities of Combined Commodity (Expiry) of MC92

Contact
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