Contract Specifications of Cotton - Long Staple Symbol ... - MCX

Contract Specifications of Cotton - Long Staple
Symbol
LONGCOTTON
Description
LONGCOTTONMMMYY
Contracts available for trading
January contract
August 16 of the earlier year to January 15 of the
contract year
February contract
September 16 of the earlier year to February 15 of the
contract year
March contract
October 16 of the earlier year to March 15 of the
contract year
April contract
November 16 of the earlier year to April 15 of the
contract year
May contract
December 16 of the earlier year to May 15 of the
contract year
July contract
February 16 to July 15 of the contract year
October contract
May 16 to October 15 of the contract year
November contract
June 16 to November 15 of the contract year
December contract
July 16 to December 15 of the contract year
Trading period
Trading session
Trading
Mondays through Saturdays
Monday to Friday: 10.00 a.m. to 5.00 p.m.
Saturday: 10.00 a.m. to 2.00 p.m.
Trading unit
Quotation/Base Value
Maximum order size
50 bales (25 candy approx.)
Rs. per candy (1 candy = 355.60 Kg)
500 bales
Tick size (minimum price Rs. 10.00
movement)
Daily price limits 3%
Price Quote
Ex – Warehouse Kadi (excluding Sales tax/VAT/Octroi
and all other taxes)

Initial margin 5%
Special Margin
Delivery Period Margin
Maximum Allowable Open
Position
In case of additional volatility, a special margin at such
percentage, as deemed fit, will be imposed
immediately on both buy and sale side in respect of all
outstanding position, which will remain in force for
next 2 days, after which the special margin will be
relaxed.
Delivery
25% of the open position during the delivery period
For individual clients: 20000 bales
For a member collectively for all clients: 60000
bales or 15% of the market-wide open position
whichever is higher.
Delivery Unit
Delivery Centers
Additional Delivery Center
Quality Specifications
For Near Month Delivery
For individual clients: 4000 bales
For a member collectively for all clients: 12000
bales or 15% of the market-wide open position
whichever is higher.
(As per FMC letter no. 6/1/2008/MKT-II dated
11 th February, 2008)
50 bales (85 quintals) – 25 candy approx.
Kadi, Gujarat
Rajkot, Gujarat
Staple length Basis (On HVI Mode) 28.50 mm
Tenderable range
28.00 mm & Above
Above 28. 50 mm
No Premium
28.00 – 28.49 mm Discount of Rs 150 per candy
on pro-rata basis.
Below 28.00 mm
Rejection
Micronaire Basis 3.8 to 4.9
Tenderable range 3.5 to 4.9
Below 3.5
Rejection
3.50 – 3.79 Discount of Rs 200 per candy on
pro-rata basis.
Above 4.9
Rejection

Strength Basis (On HVI Mode) 28 G/Tex
Tenderable range
28 G/Tex or above
Trash Basis 3.00 %
Tenderable range
3.00% maximum
Below 3%
No Premium
Above 3%
Rejection
Moisture Basis 8.00 %
Tenderable range
8.50 % maximum
8.01 to 8.50 % Discount 1%
8.51% and Above Rejection
Grade
Basis
Tenderable range
Fine
Super Fine
Fine and Super Fine
Discount of Rs 300 per candy
Goods should lie under the Tenderable Range according to defined quality
specifications. Outlaying goods will not be accepted for delivery.
Crop conditions:
1. Only current season Indian crop (October to September) is deliverable.
2. Re-tendering of goods delivered in earlier contracts in subsequent contracts would
attract Rs. 50/- candy discount to the tenderer per subsequent contract. For
example, if cotton delivered in November 2006 contract is re tendered in February
2007 contract, then the amount of discount would be Rs. 150 per candy. Out of this,
90% would be passed on to the buyers and 10% would be appropriated by the
Exchange.
Delivery Logic
Seller’s Option
Delivery and Settlement Procedure of Cotton – Long Staple
Delivery Logic
Seller’s Option
Tender day
10 th of the contract expiry month by 6:00 pm
(Seller’s / Buyer’s Intentions)
Tender period
11 th to 15 th of the contract expiry month
Delivery period 16 th to 18 th of the contract expiry month
Tender notice / Delivery Pay-in The seller will issue tender notice on tender day.
Submit Warehouse Receipt and Quality Certificate
issued by Quality Certifying Agency during tender
period.
Mode of Communication
Fax / Courier

Dissemination of Information on
tendered delivery on Trader Work
Station
Tender and Delivery Period
Margin
Exemption from Delivery Period
Margin
Delivery Allocation
- Date of Delivery Allocation
- Rate
On next working day after the tender day
25% on outstanding position during tender and
delivery period.
Delivery Period Margin is exempted if goods
tendered during tender period with all the
documentary evidence
On the Expiry date
At Due date rate (DDR)
Delivery Pay-in
During Tender period by 6.00 p.m.
Delivery Pay-out E+3 working days by 11.00 a.m. ( E – Expiry date )
Pay-in of Funds
E+2 working days by 11.00 a.m.
Pay-out of Funds
E+3 working days by 11.00 a.m.
Penal Provision
1) Any seller who has not submitted intention to
deliver during tender day and having open
position on the expiry date, a penalty of 1% of
the DDR shall be imposed on him out of which
90% shall be passed on to the counter party
while 10% will be retained by the Exchange
towards administrative expenses.
Delivery Default
2) If Seller fails to deliver after giving the tender
notice, a penalty of 2.5% of the DDR shall be
imposed on him.
3) In case a buyer refuses to take delivery or fails
to honour his fund obligations then the open
position will be closed out at lower of the
following two rates:
‣ Due Date Rate (DDR) of the contract or
‣ The Spot market price, as disseminated by
the Exchange, on the date of the pay-in
default/refusal by the buyer to take delivery.
Accordingly,
‣ If the spot market price is lower than the
DDR as mentioned above - the difference
between the two will be debited to the
buyer.
‣ A penalty of 2.5% will be imposed for
delivery allocated to him.
Additionally, a replacement cost of 4% will be
recovered from the defaulting buyer / seller.

Out of the penalty (as mentioned in 2 and 3
above), 2% will be credited to IPF and 0.5% will be
credited to the counter party. While out of the
replacement cost and differences recovered 90%
will be passed on to the counter party and 10% will
be retained by the Exchange towards
administrative expenses.
Taxes, duties, cess and levies
Due date rate
Odd Lot treatment
Adjustment of transportation
cost for delivery made at a center
other than Kadi
Packaging and Weighment
Norms
Members should not square off their positions
once intention of delivery is given to the Exchange.
In case a member squares his open position (in
full or in part) after giving the intentions, the
Exchange may initiate disciplinary action as it may
deem fit or may charge additional penalty.
Buyer pays the Sales Tax or submits relevant
form, whereas all other charges, levies or APMC
Cess applicable at the delivery center will be on
account of sellers. The buyer will pay VAT, if
implemented in the state where the delivery centre
is located. In case of Inter-State movement, the
buyer has to submit requisite forms or pay CST as
applicable. Post lifting delivery all charges are
borne by the buyer.
Exchange shall take spot prices from a panel of
different entities from spot market and shall
compute the daily average price from the prices
taken on a day from different entities. DDR will be
calculated by way of taking simple average of last
3 days of the spot market prices so computed.
Not applicable
The seller will bear the cost of transportation from
the center where the delivery is actually made and
upto Kadi for any delivery made at a center other
than Kadi.
• Cotton bales must have new iron hoops.
• Cotton bale must have packaging of cotton
cloth with 100 to 120 gm per bale. Hessian
packaging is also acceptable with good
packaging conditions.
• There should be weightment of individual bale
at the time of deposit and delivery both and
weight note of each lot with individual bale
weight, should be provided by seller to buyer.
• Tare weight of 2.25 kg will be deducted per
bale to get net weight of a bale.

• A variation of 2 Kgs per bale will be
acceptable as maximum weight loss during
storage from the time of deposit to the time of
delivery.
Warehouse, Insurance and
transportation charges
Buyer’s option for lifting of
Delivery
Delivery center
• Borne by the seller upto pay-out date of funds or
delivery, whichever is earlier.
• Borne by the buyer after payout date of funds or
delivery, whichever is earlier.
•
Buyer will not have any option about choosing the
place of delivery and will have to accept the
delivery as per allocation made by the Exchange.
Deliveries can either be effected from the factory
or godown where the Cotton is either ginned or
pressed (i.e. producer’s own godown where the
goods are produced) or Govt. warehouse within
the vicinity of the factory (STC warehouse or CWC
godown within the taluka-district out of Octroi
limits, if applicable) at Kadi or else from
designated centers - Rajkot, Gujarat.
While the delivery can be effected from Rajkot,
however this will be subject to deduction of freight
from the place of delivery to Kadi. Freight
deduction will be specified by the Exchagne.
Each delivery order issued shall be in multiples of
minimum delivery lots and shall be designated for
only one delivery center and one location in such
center. The tenderer of delivery order shall also
disclose the identity of the Member / Registered
Non Member who shall be performing the Delivery.
The seller shall not issue delivery order at a place
where there is restriction against movement of
goods. In case, the seller is unable to give permit
to the buyer, the same would be treated as No-
Delivery and he shall be liable to pay such penalty
as may be applicable for failure to tender delivery.
Weighment at the time of delivery
and treatment of short delivery or
excess delivery.
Independent surveyor will do the weighment,
which will be final. Buyer may send his
representative while surveyor is weighing and
drawing the sample to see whether the Surveyor is
following the right procedure as mentioned by
Exchange. In case of non-availability of buyer’s
representative, the seller shall claim and receive
compensation for delay in delivery in terms of

Delivery order
Delivery Grades
Evidence of Stock in possession
Endorsement of Delivery Order
warehouse charges, insurance charges etc. as
decided by Exchange. Delivery shall be treated as
complete if the seller delivers the quantity within
the limits as prescribed by the exchange. Delivery
will be rejected if it is below the minimum
permissible limit. In case the delivered quantity
exceeds the maximum permissible limit the
balance quantity shall be treated as excess.
In case of shortage in delivery, the buyer shall be
entitled to claim the difference between the price
payable as per the delivery order and the market
price on the date of delivery from the seller if the
spot market price is higher. Similarly, in case of
excess delivery the buyer will pay for the excess
quantity at the delivery order price or the spot
market price on the date of delivery, whichever is
lower.
Delivery Order will be submitted in specified format
giving details of Members / Registered Non-
Members who shall perform delivery. The delivery
can be effected from Exchange designated
warehouse or from seller’s factory or godown
where the Cotton is either ginned or pressed.
The procedure followed for drawing samples and
carrying out test analysis shall be as per EICA
Bye-Laws. Delivery order once submitted cannot
be withdrawn or cancelled or changed unless so
agreed by Exchagne in writing. Members
tendering the delivery order shall clearly specify
the grade and shall be in conformity with the
surveyor’s certificate accompanied with the
delivery document and cannot be changed
subsequently.
The members tendering delivery will have the
option of delivering such grades of goods as
permitted by the Exchange under the contract
specifications. The Buyer will not have any option
to select a particular grade and the delivery offered
by the seller and allocated by the Exchange shall
be binding on him.
At the time of issuing the delivery order, the
member must prove to the Exchange that he holds
stocks of the quantity and quality specified in the
delivery order at the declared delivery center. This
should be substantiated by way of producing
warehouse receipt
The Buyer member can endorse delivery order to

Lifting of Delivery
Close out of outstanding
positions
Sampling and Analysis at the
time of Delivery
Sampling Procedure
a client or any third party with full disclosure given
to Exchange. Responsibility for contractual liability
would be with the original assignee.
Within 7 days from Delivery Allocation date subject
to taking delivery of at least 1/7 th of total delivery
allocated on each day. In case a Buyer fails to lift
delivery within aforesaid days, the seller shall
claim compensation in respect of warehouse
charges, insurance charges, etc. Similarly, if seller
fails to give delivery on the scheduled date
because of non availability of seller’s
representative, the buyer shall claim and receive
compensation @ Rs. 50/- per delivery lot each day
till default continues. The buyer and seller will
indicate to each other about delivery schedule of
the said commodity with a copy to Exchagne
within 1 day of getting delivery document.
All outstanding positions on the expiry of contract,
not settled by way of delivery in the aforesaid
manner, will be settled as per the DDR and the
respective pay-in and pay-out of funds of such
closed out positions with penalty shall be effected
by 1:00 p.m. on 16 th day of contract expiry month.
In case the buyer does not agree to the Surveyor's
report as to the quality of the commodity, he shall
desire for second sampling and intimate the
Exchange in writing within 48 hours of the pay-out
date.
The system of drawing of samples tendered for
delivery will be as prescribed in the Bureau of
Indian Standards procedure.. Three Samples shall
be drawn as under:
• First Sample – for the buyer
• Second Sample – for the seller
• Third Sample – for final reference, if If
necessary
the first sample collected by the Buyer and
analyzed by the surveyor appointed by him,
conforms to the specifications, then the goods
tendered for delivery shall be accepted and no
subsequent claims from the Buyer regarding
quantum of rebate or any other indemnification
shall be admissible nor sellers shall be obliged to
pass any sealed samples to the Buyer if requested
subsequently. The sampling methods to be
adopted for analysis will be decided by the
Exchange.

Failing of First Sample
Final Surveyor’s Report
Obligations of the Independent
Analyst
Legal Obligation
Extension of Delivery Period
Applicability of Business Rules
If the first sample as examined by the buyer's
surveyor fails to conform to the quality standards
specified, the Buyer shall intimate the seller within
72 hours of collection of sealed sample along with
a copy of the analyst's report. The seller shall
immediately send the second sealed sample to an
approved laboratory, which is also agreed by the
buyer. The result of the same shall be binding on
both the parties. In the event the Buyer and Seller
do not mutually reach agreement with the results
of the second sample test, then Exchagne shall
send the third sealed sample to any one of the
approved laboratories / surveyor, as decided by
the Exchange.
The analyst's report of the approved and agreed
independent laboratory shall be forwarded by
Exchange to the parties immediately on receipt of
the same. In such case, the final payment to the
seller will be made on the basis of test report
received by the Exchange pursuant to the third
test. The Exchange will also direct the party, in
whose favour the result is declared to collect the
cost of tests and detention charges from the other
party. In case the commodity stands rejected then
it will tantamount to failure on the part of the seller
to give delivery, which shall be closed out as per
the DDR treating the same as shortage.
In order to ensure that tests are exactly
comparable and that the results are consistent, the
independent analyst shall determine the particular
analytical test by applying the methods specified in
relevant IS. The analyst shall be required to
append a certificate to that effect to the analysis
report issued by him.
The member will provide appropriate tax forms
wherever required as per law and as customary
and neither of the parties will unreasonably refuse
to do so.
As per the Exchange decision due to a force
majeure or otherwise.
The general provisions of Byelaws, rules and
Business Rules of the Exchange and decisions
taken by Forward Markets Commission, Board of
Directors and Executive Committee of the
Exchange in respect of matters specified above
will form and integral part of this contract. The
Exchange or FMC as the case may be further
prescribe additional measures relating to delivery

procedures, warehousing, quality certification,
margining, risk management from time to time.
(The interpretation or clarification given by the
Exchange on any terms of this contract shall be
final and binding on the members and others.)
Note :
1. Kindly refer circular no. MCX/366/2005 dated October 27, 2005 and
MCX/367/2005 dated October 27, 2005 or any subsequent circulars,
regarding Standard deductions and Delivery centers respectively, if
applicable.
2. Proprietary account of a member is treated as client account. Please refer
circular no. MCX/T&S/052/2008 dated February 5, 2008.