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 pre-
determined 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

Regional
NCDEX MCX NMCE NBOT
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 client’s 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

World’s second largest silver exchange after NYMEX

World’s 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

It’s 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

It’s the unit on which a particular commodity will be delivered on the

exchange. e.g. Silver will be delivered in Kgs only price Tick

It’s 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
client’s 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
depositor’s electronic account.

The seller then gives the invoice to his clearing member, who would courier
the same to buyer’s 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 client’s 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 Exchange’s 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 client’s position and margin
required for it

The pay out is made on the same day basis if it’s 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 System…Cont

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 client’s 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 client’s 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 Day’s Margin
Report.
Structure of Margin Report:
Accepted
Net Additiona
Client Group Client Stk AH Undercle Bill Utilized Available
Financial Collaterals Available l Cash
Code Name Name Cut aring Margin Margin Margin%
Margin Margin
Funds
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 Day’s 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 Holding Position in case Allowing to go into Naked
Allowing Limit against of Debit against Committed
Approval Type Margin Multiplier Payment Commitment Short Margin Payment

Against Against Against

Against Same City Against Same City Against Same City
Fund Trf Clearing Fund Trf Clearing Fund Trf Clearing
Hierarchy MCX + NCDEX mode / DD Cheque mode / DD Cheque mode / DD Cheque

Dealers / RMs Upto 1 time Upto 50K Upto 25k Upto 50K Upto 25k Upto 10k Nil

Branch
Managers Upto 1.5 times Upto 1 lac Upto 50k Upto 1 lac Upto 50k Upto 50k Upto 10k

Area Heads /
Zonal Heads /
Product
Managers 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 Above 10 Above 5
Management Above 3 times Above 10 lac Above 5 lac lac 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 DD’s / 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 Day’s 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 Religare’s 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
member’s 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 client’s day’s
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

Support :
E-Mail: [email protected];
Contact No: 0120 -339 5602/5702/5603/5703/5541
L Nirupama: 9650897186

Few Relevant Contact IDs:

E-Mail ID for Trade Change: [email protected]
E-Mail ID for Password: [email protected]
Thank You