compliance guide - MCX

Compliance Guidef) any other activity which is ambiguous or misleading the client in any way.Further, the Members may note that if they are found indulged in any of the above activities,the Exchange shall take strict disciplinary action such as deactivation of terminal (s), suspension/ termination from Membership and in addition, the Member shall also be liable for a penalty ofminimum Rs.1 lakh per case in terms of the Rules, Bye Laws, Business Rules and Circulars of theExchange.5. Bank AccountsAll Members are required to open following three types of bank accounts.‣ Settlement bank accountAs per Bye-law 9.2, Business Rule 19 (c), every Member of the Exchange is required to havedesignated bank account (called settlement bank account) with any of such branches of adesignated Clearing Bank, which has electronic funds transfer facility. Members are required tooperate the Settlement account only for the purpose of settlement of deals entered through theExchange, for the payment of margin money and for any other purpose as may be specified bythe Exchange, where the Member can transfer funds to Clients account from this account. Apartfrom such transfer, only the Exchange will have the power to withdraw money from this accountby way of direct debit instruction.‣ Client bank accountAs per Bye-law 9.2, Business Rule 19 (c), the Member can deposit cheques received from theClient and he should issue cheque/DD from this account to his Clients towards their receivableamount in the Client bank account. The Member will have a cheque book facility in this accountand he will also be entitled to issue transfer instructions to the bank for transferring moneyfrom this account to the Settlement account to meet his pay-in or margin obligations. Membersare not allowed to use Client funds for their own transactions or for transactions of any otherclient or for the purpose other than specified by the Exchange. (Refer Business Rule 27(q))‣ Business/Own/Expense accountAs per Bye-law 9.2, Circular No. MCX/012/2006 dated January 10, 2006 all Members arerequired to ensure that they have maintained separate bank accounts for their owntransactions.As per Circular No. MCX/012/2006 dated January 10, 2006the Exchange Member will at all timeskeep the money of the Constituent in the Clients account maintained with the Clearing bank.Client funds should not be deposited in own bank account.The member must ensure compliance with the following requirements:‣ As per Business Rule 27(q), every Member shall maintain the Constituent/client funds in the- 27 -