Commodity derivatives – miscellaneous norms
Summary
This circular reissues and updates specific norms for National Commodity Derivatives Exchanges previously prescribed by the erstwhile Forward Markets Commission. It mandates quarterly disclosure of member terminal disablement, allows exchanges to set delivery intention timelines, and requires pre-launch disclosure of location premiums or discounts. Additionally, it clarifies that Extreme Loss Margin must be collected upfront with penalties applicable from T day, correcting references in earlier circulars.
Text
As per Section 131 [B] of the Finance Act, 2015 all rules, directions, guidelines, instructions, circulars, or any like instruments, made by the erstwhile Forward Markets Commission (FMC) or the Central Government applicable to recognised associations under the Forward Contracts Regulation Act, 1952 (FCRA) would continue to remain in force for a period of one year from the date on which FCRA was repealed (September 29, 2015), or till such time as notified by SEBI, whichever is earlier.
The disablement of terminals of the members along with duration of disablement due to shortage of funds, margin money etc., shall be disclosed by Exchange on its website at the end of every quarter i.e., 30th June, 30th September, 31st December and 31st March.
Exchanges may decide the timelines for submission of delivery instruction by members based on their assessment of the time required for marking as well as for modifying any delivery intentions wrongly marked.
Exchanges shall determine and disclose for contracts the location premium/discount prior to launch of the contract in various commodities.
It is clarified that extreme loss margin (ELM) is also required to be collected upfront and the penalty structure specified in clause 3(iv) of the said circular is applicable from T day for ELM too.
The word “Section 131 (4)” in paragraph 1 of the below mentioned list of circulars may be read as “Section 131 [B]”:
Exchanges are advised to bring the provisions of this circular to the notice of their members and also to disseminate the same on their website.
This circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act 1992, read with Section 10 of the Securities Contracts (Regulation) Act, 1956 to protect the interest f investors in securities and to promote the development of, and regulate the securities market.
Source: SecMarx — Commodity derivatives – miscellaneous norms. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.