compliance guide - MCX

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Compliance GuideMembers may install the ATF through CTCL software only at the locations of the members afterensuring that all the requirements stipulated by the MCX in this regard have been compliedwith. Members are required to obtain prior written permission of the Exchange for any changesin the software for the purpose of availing Automated Trading Facility through CTCL.All automated trading orders need to be placed through specified CTCL IDs allotted for thepurpose and all automated trading orders should be placed in the system through these IDsonly. System audit that is being done for CTCL is required to be extended to the automatedtrading software and the same may be carried out in conjunction with the CTCL audit.The Members are required to execute, sign, and subscribe, to documents, papers, agreements,covenants, bonds, and / or undertakings as may be prescribed or required by the Exchange fromtime to time. Members are required to ensure that the trades routed through AutomatedTrading facility do not result into abnormal trades or manipulative trades.Members are required to comply with the terms and conditions as agreed upon in theundertaking submitted by them for availing Automated Trading Facility.As per Circular No. MCX/CTCL/120/2009 dated March 10, 2009, Exchange may at any timeundertake inspection / audit of the Automated Trading system which is being used by them andmembers are required to co-operate with the Exchange for such inspection / audit.As per circular No. MCX/TECH/110/2011 dated April 1, 2011, Members shall be required to payannual fee for the first year in advance along with the application (The said charges are revisedvide circular No. MCX/TECH/149 dated April 28, 2011). The annual fee for the first year shall becalculated on pro-rata basis from the date of receipt of Member’s application till March 31st ofthe respective financial year. Any excess amount paid for the first year (on pro-rata basis) shallbe adjusted towards annual fees for the next financial year. The annual fee shall be payable onor before 30th April of every financial year. In case of delay in payment, Members shall also beliable to pay interest at the rate of 18% p.a. However, it may be noted that as per Circular no.MCX/CTCL/196/2013 dated May 28, 2013, the annual charges per ATF user ID payable by theMembers will be discontinued with retrospective effect from April 01, 2013.Members are requested to note that the Automated Trading Software approved by theExchange should be exclusively used for Trading on MCX Trading platform. Members who arealready using ATF are requested to submit the revised undertaking as per Annexure A latest byApril 30, 2011.Members who wish to apply for ATF through CTCL Software are required to submit the requireddocuments along with the applicable charges as per Circular no. MCX/TECH/110/2011 datedApril 1, 2011 mentioned above.As per circular No. MCX/CTCL/132/2012 dated April 4, 2012, Members using Automated TradingFacility through approved software of empanelled CTCL vendor or software developed in-houseor procured from non-empanelled vendor shall submit to the Exchange Compliance certificate- 36 -
Compliance Guideas mentioned in the annexure of the said circular. The said compliance certificate is to besubmitted latest by 30 th June on yearly basis.Members of the Exchange having Exchange approved Algorithmic Trading Facility (ATF) arerequired to undertake system audit of their ATF software on yearly basis through Exchangeempanelled System auditors as required as per Circular no. MCX/CTCL/191/2013 dated May 23,2013.Further, it may be noted that as per Circular no. MCX/T&S/402/2012 dated November 30, 2012algo / high frequency trades are not allowed in mini and micro contracts. However, as perCircular no. MCX/T&S/258/2013 dated July 24 2013 algo / high frequency trading is allowed ingold mini contracts. It may thus be noted that algo / high frequency trades shall be allowedas permitted by the Commission from time to time.5. Terminal LocationAs per Bye Law 5.15.1, Rule 36 (c),Business Rule 29(b , 30, Trading on the Exchange will beallowed only through approved Workstation(s) located at approved locations for the office(s) ofa Member. If an approved workstation of a Trading Member is connected by LAN or any otherway to other workstations at any place it will require an approval of the Exchange. For everyTWS, a member will be required to take specific permission from the Exchange and obtain userid in advance. Further, the Members must ensure compliance with the guidelines prescribed bythe Exchange with regard to installation of trading terminals at the Member offices.As per Circular No. MCX/CTCL/042/2007 dated January 31, 2007 , the member should submitan undertaking of not to develop or use any software / program which will either directly orindirectly facilitate orders to cross trades of their clients with each other. All orders will beoffered to the market for matching.6. Antivirus Software (Refer Circular No. MCX/028/2004 dated May 07, 2004)As per Circular No. MCX/028/2004 dated May 07, 2004, Members should ensure that:‣ Operating system (Windows) of their respective Desktop/Laptops used for Exchange tradingis updated with the latest security patches released by the operating system vendor(Microsoft). The members can ask their systems personnel or their hardware vendor toupdate the systems with the latest security patches.‣ Members should ensure that standard anti-virus software is loaded on their systems.‣ The members should use good anti-virus software for their systems.‣ Further, the antivirus software with the latest virus signatures has been updated periodicallyand the periodic updates for the antivirus are available on the respective anti-virus vendorwebsites.‣ Update the antivirus software with the latest virus signatures every week. Further, theyshould ensure that the weekly updates for the antivirus are available on the respective antivirusvendor websites and that the antivirus software for the Admin terminal is latest and is- 37 -
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