Multi Commodity Exchange of India Ltd.

India

Introduction:

MCX is the largest and most diverse commodities exchange in India offering more than 50 commodities on its platform. Founded in November 2003, it has a state of the art trading platform, which serves the risk management needs of commodity market participants offering widest range of international benchmark commodities as well as domestic commodities. MCX has entered into strategic global alliance with leading global commodity exchanges and has also taken a collaborative approach with several domestic commodity associations and bodies for the overall development of the Indian commodity sector.

Globally today MCX ranks among the world’s top 10 commodity exchanges in terms of number of contracts traded based on FIA for Year 2007. MCX also ranks no.1 silver, no.2 in natural gas and no.3 in gold, crude oil, and copper futures trading in the world. In addition to being accredited with ISO 9001: 2000 for quality management, MCX has the distinction of achieving the ISO 27001: 2005 certification, the global benchmark for information security management systems.

MCX also one amongst the leading commodity derivatives exchanges in the world. MCX sets benchmark reference prices for number of primary commodities of national significance in the agriculture, bullion, base metals, energy, emissions and industrial sectors.

Being a nation-wide commodity exchange MCX has a robust and scalable infrastructure, offering wide reach & penetration through 1000+ centers, more than 1800 members and 42000 +terminals nationally.

MCX offers a wide spectrum of opportunities to a large cross section of participants including Producers/ Processors, Traders, Corporates, Importers, Exporters, Co-operatives and Industry Associations amongst others. Within 4 years, MCX has brought a paradigm change in the Indian commodities sector through its innovative application of technology, path-breaking ideas, novel products & unique alliances. Today, MCX has become synonymous with innovation as it has consistently done things differently and also adopted new practices to emerge as thought leader in its industry.

MCX has successfully put India on the global commodities map, by discovering benchmark commodity prices in the Indian time zone between London & Tokyo 

Member Categories:

ACCESS TO FUTURES MARKETS:

Currently, there are four categories of membership available at MCX, depending upon the trading and clearing rights.

Trading Member (TM): A Trading Member (TM) is a person having been admitted by the Board as such, who shall have rights to trade on his own account as well as on account of his clients, but shall have no right to clear and settle such trades himself. All such trading members must be affiliated with any one of the Institutional Trading-cum-Clearing Member (ITCM) or Professional Clearing Member (PCM) having clearing rights on the Exchange.

Trading-cum-Clearing Member (TCM): A TCM is entitled to trade on his own account as well as on account of his clients, and clear and settle trades himself. A sole proprietor, partnership firm, a joint Hindu Undivided Family (HUF), a corporate entity, a co-operative society, a public sector organization or any other Government or non-Government entity can become a TCM.

There are two types of TCM memberships, namely, TCM-1 and TCM-2. TCM-1 refers to transferable non-deposit based membership and TCM-2 refers to non-transferable deposit-based membership.

Institutional Trading-cum-Clearing Member (ITCM): Only an Institution/Corporate can be admitted by the exchange as a member, conferring upon them the right to trade and clear through the Clearing House of the Exchange as an ITCM. Moreover, the member may be allowed to make deals for himself as well as on behalf of his clients and clear and settle such deals. Further the ITCMs can also appoint sub-brokers, authorized persons and Trading Members who would be registered as Trading Members on MCX at the request of the ITCM. The ITCM will clear and settle trades on behalf of the sub-brokers, authorized persons and such Trading Members registered on their requests.

Professional Clearing Members: A PCM is entitled to clear and settle traders executed by other members of the exchange. A corporate entity and an institution only can apply for PCM. The member would be allowed to clear and settle trades of such members of the exchange who choose to clear and settle their trades through such PCM.

Types of Margins:

Different types of margins as 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 positions after netting at the level of individual client and grossed across all clients in respect of client positions and on the value of open positions in respect of proprietary positions without any netting off between client and proprietary positions. If a member has open position in different contracts of the same commodity running concurrently, the member is required to pay margin separately on each of these contracts. Similarly, if a member has open position in different commodities, the total amount required is calculated as sum total of margin required in each contract in each commodity separately. The computation methodology in respect of ordinary margin is as follows:

Intra day-During the trading day 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 on client/proprietary basis in addition to previous day’s open position carried forward at the official closing price of previous day.

End of day-At the end of the trading day, the margin amount is computed on gross position on individual client and proprietary basis in a contract in quantitative terms multiplied by the official closing price.

Special Margin: In case the price fluctuation in a contract during the trading day 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. Such special margin amount is immediately blocked out of available margin deposits 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 the member is put in square off mode i.e. the member can square off his outstanding open position. On squaring off or liquidating the outstanding open position to the extent of excess margin utilized, the status of the member gets changed from square off mode to active status. In square off mode member can’t create any fresh position... If the price volatility reaches 100% of the circuit filter limit, orders will be accepted by the system only upto the price level equivalent to such circuit filter. 

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. The delivery period margin is calculated at the rate specified for respective commodity multiplied by the net open position held by a member in the expiring contract. When a seller submits delivery documents along with surveyor’s certificate, his position is treated as settled and his 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.

INITIAL MARGIN:

Commodity Name	Initial Margin
ALUMINIUM	5.00%
ARECANUT	5.00%
Brent Crude Oil	5.00%
CARDAMOM	5.00%
CASHEW KERNEL	5.00%
CASTOROIL	5.00%
CARBON CREDITS	6.00%
Chana ( Gram )	5.00%
COCONUT CAKE	5.00%
COCONUTOIL	5.00%
COFFEE (ROBUSTA)	5.00%
COPPER	5.00%
Cotton - Long Staple	5.00%
Cotton - Medium Staple	5.00%
COTTONSEED	5.00%
Light Sweet Crude Oil	5.00%
RICE BRAN DOC	5.00%
FURNACEOIL	5.00%
Ground Nut Oil Expeller	5.00%
GOLD.995	4.00%
GOLD MINI 995	4.00%
GUARGUM	5.00%
GUARSEED	5.00%
JEERA	5.00%
RAWJUTE	5.00%
KAPAS	5.00%
KAPASKHALI	5.00%
LEAD	5.00%
MAIZE	5.00%
MASUR	5.00%
MENTHAOIL	5.00%
MIDDLE EAST CRUDE OIL	5.00%
MGGURCHAKU	5.00%
Mustard Seed Ex. Jaipur	5.00%
MUSTARD OIL	5.00%
NATURAL GAS	5.00%
NICKEL	6.00%
PEPPER	5.00%
POTATO	5.00%
POTATO TARKESHWAR	5.00%
REDCHILLI *	6.00%
Refined Soy Oil	5.00%
CASTORSEED RAJKOT	5.00%
RUBBER RSS4	5.00%
SESAME SEED	5.00%
SILVER	5.00%
SILVER MINI 999	5.00%
SOYABEAN	5.00%
SPONGEIRON	5.00%
STEELFLAT	5.00%
Steel Long - Bhavnagar	5.00%
SUGARM Ex-Alipur. Delhi	5.00%
SUGAR S KOLHAPUR	5.00%
TIN	5.00%
Turmeric Ex. Nizamabad	5.00%
ZINC	5.00%

Note – * - Initial Margin for REDCHILLI April 2008 Contract is 6% & REDCHILLI May 2008 Contract is 5%

NEWS: Log on to www.mcxindia.com for the latest news on MCX

NEWS:

Log on to www.mcxindia.com  for the latest news on MCX.