Annexure-4 Guidance Note - Do'S and Don'Ts For The Clients Do's

Annexure-4
GUIDANCE NOTE - DO’s AND DON’Ts FOR THE CLIENTS
Do’s
1. Trade only through Registered Members of the Exchange. Check from the Exchange
website at following link https://www.mcxindia.com/membership/notice-
board/Member-AP -Details to see whether the Member is registered with the Exchange.
2. Insist on filling up a standard 'Know Your Client (KYC)' form before you commence trading
3. Insist on getting a Unique Client Code (UCC) and ensure all your trades are done under
the said UCC.
4. Insist on reading and signing a standard 'Risk Disclosure Agreement'.
5. Obtain a copy of your KYC and/ or other documents executed by you with the Member,
from the Member.
6. Cross check the genuineness of trades carried out at the Exchange through the trade
verification facility available on the Exchange website at the following link
https://www.mcxindia.com/en/login .The trades can be verified online where trade
information is available up to 5 working days from the trade date.
7. 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.
8. 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.
9. Obtain receipt for collaterals deposited with the Member towards margins.
10. Go through the Rules, Bye-laws, Regulations, Circulars, Directives, Notifications of the
Exchange as well as of the Regulators, Government and other authorities to know your
rights and duties vis-à-vis those of the Member.
11. Ask all relevant questions and clear your doubts with your Member before transacting.
12. Insist on receiving the bills for every settlement.
13. 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.
14. Scrutinize minutely both the transaction & holding statements that you receive from your
Depository Participant.
15. Keep Delivery Instruction Slips (DIS) book issued by DPs in safe possession.
16. Ensure that the DIS numbers are preprinted and your account number (UCC) is mentioned
in the DIS book.
17. Freeze your Demat account in case of your absence for longer duration or in case of not
using the account frequently.
18. Pay required margins in time and only by Cheque and ask for receipt thereof from the
Member.
19. Deliver the commodities in case of sale or pay the money in case of purchase within the
time prescribed.
20. Understand and comply with accounting standards for derivatives.
21. Ensure to read, understand and then sign the voluntary clauses, if any, agreed between
you and the Member. Note that the clauses as agreed between you and the Member
cannot be changed without your consent.
22. Get a clear idea about all brokerage, commissions, fees and other charges levied by the
Member on you for trading and the relevant provisions/ guidelines specified by
SEBI/Commodity exchanges.
23. Make the payments by account payee cheque in favour of the Member. Ensure that you
have a documentary proof of your payment/deposit of commodities with the Member,
stating date, commodity, quantity, towards which bank/ demat account such money or
commodities (in the form of warehouse receipts) deposited and from which bank/ demat
account.
24. The payout of funds or delivery of commodities (as the case may be) shall not be made to
you within one working day from the receipt of payout from the Exchange, in case you
have given specific authorization for maintaining running account to the member. Thus, in
this regard, the running account authorization provided by you to the Member shall be
subject to the following conditions:
a) Such authorization from you shall be dated, signed by you only and contains the
clause that you may revoke the same at any time.
b) You need to bring any dispute arising from the statement of account to the notice of
the Member in writing preferably within 7 (seven) working days from the date of
receipt of funds/commodities or statement, as the case may be. In case of dispute,
refer the matter in writing to the Investors Grievance Cell of the relevant Commodity
exchanges without delay.
c) In case you have not opted for maintaining running account and pay-out is not
received on the next working day of the receipt of payout from the exchanges, please
refer the matter to the Member. In case there is dispute, ensure that you lodge a
complaint in writing immediately with the Investors Grievance Cell of the relevant
Commodity exchange.
d) Please register your mobile number and email id with the Member, to receive trade
confirmation alerts/ details of the transactions through SMS or email, by the end of
the trading day, from the commodity exchanges.
25. You should familiarize yourself with the protection accorded to the money or other
property you may deposit with your member, particularly in the event of a default in the
commodity derivatives or the member becomes insolvent or bankrupt.
26. Please ensure that you have a documentary proof of having made the deposit of such
money or property with the member, stating towards which account such money or
property deposited.
27. In case your problem/grievance/issue is not being sorted out by concerned
Member/Authorised Person then you may take up the matter with the concerned
Commodity Exchange. If you are not satisfied with the resolution of your complaint then
you can escalate the matter to SEBI.
Don'ts
1. Do not deal with any unregistered intermediaries.
2. Do not undertake off-market transactions as such transactions are illegal and fall outside
the jurisdiction of the Exchange.
3. Do not enter into assured returns arrangement with any Member
4. Do not get carried away by luring advertisements, rumours, hot tips, explicit/ implicit
promise of returns, etc.
5. Do not make payments in cash/ take any cash towards margins and settlement to/ from
the Member.
6. Do not start trading before reading and understanding the Risk Disclosure Agreement.
7. Do not neglect to set out in writing, orders for higher value given over phone.
8. Do not accept unsigned/duplicate contract note/confirmation memo.
9. Do not accept contract note/confirmation memo signed by any unauthorized person.
10. Don’t share your internet trading account’s password with anyone
11. Do not delay payment/deliveries of commodities to Member.
12. Do not forget to take note of risks involved in the investments.
13. Do not sign blank Delivery Instruction Slips (DIS) while furnishing commodities, deposits
and/or keep them with Depository Participants (DP) or member to save time.
14. Do not pay brokerage in excess of that rates prescribed by the Exchange
15. Don’t issue cheques in the name of Authorized Person.

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GUIDANCE NOTE - DO’s AND DON’Ts FOR THE CLIENTS

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