compliance guide - MCX

Compliance Guide6. Handling the Commodities of Clients for DeliveriesTypes of Demat Account:As per Circular No. MCX/238/2005 dated June 29, 2005 and Circular No. MCX/267/2005 datedJuly 22, 2005 all Members are required to open two accounts with their Depository Participantsfor handling the receipt and deliveries of commodities in demat form. They are:‣ Beneficiary Owner (BO) Account:It is opened by an investor or a Member of the Exchange who wants to hold and transactcommodities through dematerialized warehouse receipts. The beneficial owner account can beopened in the name of Individual, Corporate, and Registered Trusts etc.‣ Pool account:It is popularly known as CM Pool Account. In CM Pool account clearing Members are authorisedto make pay-in and receive pay-out from a Clearing Corporation / Clearing House against tradesdone by them or their clients. This account is meant only to transfer commodities to and receivedelivery of commodities from the clearing corporation/clearing house and hence, the Memberdoes not have any ownership (beneficiary) rights over the commodities held in such an account.A Clearing Member (CM) is required to open both Clearing Member (Pool) Account as well as aBO Account with each of the depositories (i.e. NSDL and CDSL).Members are required to maintain a proper record of all commodities received and deliveredfrom their Pool Account and transferred to BO, if any. Further Member should preserveacknowledged copies of the Delivery Instruction Slip (DIS) given/to their DP for transferring thecommodities from the Pool Account to the clients’ account after Pay-out from the Exchange.The Member must keep and maintain the Register of Commodities and details of premium anddiscount, in case of delivery. Further member may refer to circular no. MCX/405/2005 datedDecember 3, 2005 and MCX/309/2005 dated September 2, 2005.It may be noted that as per Circular No. MCX/C&S/283/2013 dated August 22, 2013, delivery inall commodities on Exchange platform expiring from August 2013 contract onwards shall besettled only by Physical Mode viz. by submitting valid vault receipts/ warehouse receipts (dulyendorsed and signed by the depositor and the member) and quality certificate issued bydesignated quality certifying agency.7. Margin CollectionsAs per Bye-law 8, Business Rule 27(r), the Members are required to collect specified marginfrom their clients before entertaining any order from them Members may note that 100%upfront initial margin must be collected by them from their clients before placing any order ontheir behalf. The member must ensure that the margin has been collected in the formprescribed by the Exchange and that the same has not been used for another client. Further, the- 29 -