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| Do's & Don'ts for Clients/ Investors in Commodity Futures Market |
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Dealing
with Members |
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| Do's |
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- Trade
only through Registered
Members of
the Exchange. Check
from the Exchange website
at http://www.mcxindia.com/SitePages/MembersDetails.aspx to see whether the Member
is registered with the
Exchange.
- Insist
on filling up a standard
'Know Your Client (KYC)'
form before you commence
trading
- Insist
on getting a Unique
Client Code (UCC) and
ensure all your trades
are done under the said
UCC.
- Insist on filling up
a standard ‘Member-Client
Agreement’.
- Insist on reading and
signing a standard 'Risk
Disclosure Agreement'.
- Obtain a copy of your
KYC, Member-Client Agreement
and/ or other documents
executed by you with
the Member, from the
Member.
- Cross
check the genuineness
of trades carried
out at MCX through the
trade verification facility
available on MCX website.
The trades can be verified
online at http://www.mcxindia.com/SitePages/TradeVerification.aspx where trade information
is available up to 5
working days from the
trade date.
- Insist
on a duly signed Contract
Note in specified format
for every executed trade
within 24 hours of trade,
highlighting the details
of the trade along with
your UCC.
- Ensure
that the Contract Note
contains all the relevant
information such as Member Registration
Number, Order No., Order
Date, Order time, Trade
No., Trade rate, Quantity,
Arbitration Clause, etc.
- Obtain
receipt for collaterals
deposited with the Member
towards margins.
- Go
through the Rules, Bye-laws,
Regulations, Circulars,
Directives, Notifications
of the Exchange as well
as of the Regulators,
Government and other
authorities and details
of Client-Trading Member
Agreement to know your
rights and duties vis-à-vis
those of the Member.
- Ask
all relevant questions
and clear your doubts
with your Member before
transacting.
- Insist on receiving
the bills for every
settlement.
- Insist on Monthly statements
of your ledger account
and report any discrepancies
in the statement to
your Member within 7
working days. In case
of unsatisfactory response
report the discrepancy
to the Exchange within
15 working days from
the date of cause of
action.
- Scrutinize
minutely both the transaction
& holding statements that you receive from
your Depository Participant.
- Keep Delivery Instruction
Slips (DIS) book
issued by DPs in safe
possession.
- Ensure
that the DIS numbers
are preprinted and your
account number (UCC)
is mentioned in the
DIS book.
- Freeze
your Demat account in
case of your absence
for longer duration
or in case of not using
the account frequently.
- Pay
required margins in
time and only by Cheque
and ask for receipt
thereof from the Member.
- Deliver
the commodities in case
of sale or pay the money
in case of purchase
within the time prescribed.
- Understand
and comply with accounting
standards for derivatives.
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| Don'ts |
- Do
not deal with any unregistered
intermediaries.
- Do
not undertake off-market
transactions as such
transactions are illegal
and fall outside the
jurisdiction of the
Exchange.
- Do
not enter into assured
returns arrangement
with any Member
- Do
not get carried away
by luring advertisements,
rumours, hot tips, explicit/
implicit promise of
returns, etc.
- Do
not make payments in
cash/ take any cash
towards margins and
settlement to/ from
the Member.
- Do not start trading before reading and understanding the Risk Disclosure Agreement and entering into the prescribed agreement with the Member.
- Do not neglect to set out in writing, orders for higher value given over phone.
- Do not accept unsigned/duplicate contract note/confirmation memo.
- Do not accept contract note/confirmation memo signed by any unauthorized person.
- Do not delay payment/deliveries of commodities to Member.
- Do not forget to take note of risks involved in the investments.
- Do not sign blank Delivery Instruction Slips (DIS) while furnishing securities deposits and/or keep them with Depository Participants (DP) or broker to save time.
- Do not pay brokerage in excess of that rates prescribed by the Exchange
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Dealing
in Commodity Futures |
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| Do's |
- Familiarize
yourself with all the
provisions of Forward
Contracts (Regulations)
Act, 1952 dealing with
futures trading in commodities
and amendments thereof
from time to time
- Understand
the provisions and rates
relating to the sales
tax, value added tax,
APMC Tax, Mandi Cess
and Tax, octroi, excise
duty, stamp duty, etc.,
as applicable on the
underlying commodity
of any contracts offered
for trading by MCX.
- Read,
understand and be updated
about the guidelines
and circulars of the
Exchange and of the
Forward Markets Commission
issued from time to
time and kept on the
respective websites.
- Read
the commodity contracts
circulars issued & kept
on MCX website and carefully
note the contract specifications
of the commodity in
which you wish to trade.
The contract specifications
are subject to change
from time to time.
- Before
entering into buy and
sell transactions please
be aware of all the
factors that go into
the mechanism of pricing,
trading, clearing and
settlement.
- Read
the product note of
the commodity in which
you wish to deal to
understand the commodity
and parameters that
impact on the trading
and settlement of the
commodity.
- Understand
the Delivery & Settlement
Procedures given in
the Exchange Circular
of the commodity kept
on the Exchange website
that you wish to deal
in the futures market.
- Study
historical and seasonal
price movements of the
commodity that you wish
to deal in the futures
market.
- Keep
track of Governments'
Policy announcements
from time to time of
the commodity that you
wish to deal in the
futures market.
- Apply
your own prudent judgment
for investments in commodity
futures and take informed
decisions.
- Comply
with Taxation and other
Central Government/State
Governments regulatory
issues.
- Go
through all Rules, Bye
Laws, Regulations, Circulars
and directives issued
by MCX.
- Since
futures trading attract
various types of margins,
be aware of the risks
associated with your
positions in the market
and margin calls made
from time to time.
- Collect/Pay
Mark-to-Market margins
Cheque on your futures
positions on a daily
basis from/to your Member.
- Be
aware of your risk taking
ability and fix stop-loss
limits. Liquidate your
positions at such levels
to reduce further losses,
if any.
- In
case of any doubt/problems,
contact Exchange's Help
Desk or email at customersupport@mcxindia.com
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| Dont's |
- Do
not fall prey to market
rumours.
- Do not go by any
explicit/ implicit promise
made by analysts/ advisors/
experts/ market intermediary
until convinced
- Do not take trading
decisions based on reports/
predictions made in
various print and electronic
mediums without proper
evaluation.
- Do not deal based
on Bull/Bear run of
commodity markets sentiments.
- Do not trade on any
product without knowing
the risks associated
with it.
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