Clearing Mechanism

A Clearing Member's open position is arrived by aggregating the open position of all the Trading Members (TM) and all custodial participants clearing through him. A TM's open position in turn includes his proprietary open position and clients open positions. a. Proprietary / Clients Open Position While entering orders on the trading system, TMs are required to identify them as proprietary (if they are own trades) or client (if entered on behalf of clients) through 'Pro / Cli' indicator provided in the order entry screen. The proprietary positions are calculated on net basis (buy - sell) and client positions are calculated on gross of net positions of each client i.e., a buy trade is off-set by a sell trade and a sell trade is offset by a buy trade. b. Open Position Open position for the proprietary positions are calculated separately from client position. For example, For a CM - XYZ, with TMs clearing through him - ABC and PQR Proprietary Position TM Security Buy Qty Sell Qty Net Qty Buy Qty Client 1 Sell Qty Net Qty Buy Qty Client 2 Sell Qty Net Qty 2000

Net Member Long 6000

NIFTY ABC January contract NIFTY PQR January contract

4000 2000

2000 3000 1000 2000 4000 2000

2000 3000 (1000)

Long 1000 2000 1000 1000 1000 2000 (1000) Short 2000

XYZs open position for Nifty January contract is : Member ABC PQR Total for XYZ Long Position 6000 1000 7000 Short Position 0 2000 2000