NATIONAL COMMODITY & DERIVATIVES EXCHANGE LIMITED

Frequently Asked Questions – Member Inspection

A. Opening Client Account

1. Is there a format of Client Account Opening Form?
Please refer the Exchange circular no. NCDEX/LEGAL-003/2015/136 dated April 21, 2015.

2. What are the guidelines to be followed for implementation of Uniform Client Registration
through the facilities of KRAs and CKYCR in the Commodity Markets?
Please refer the Exchange circular no. NCDEX/MEMBERSHIP-010/2016/312 dated November
22, 2016 and NCDEX/MEMBERSHIP-006/2016/217 dated September 15, 2016.

3. What are the valid documents which can be collected as address proof, identity proof and
proof of bank account from client?
Please refer the Exchange circular no. NCDEX/LEGAL-003/2015/136 dated April 21, 2015.

4. Whether Exchange Members are required to publish details of the additional Risk
Disclosure Document related to Options trading, on their website?
Yes, the members who have a website are required to publish additional Risk Disclosure
Document related to options trading on their website. This is besides the requirement of
Member specifically communicating and making clients aware of the same, in electronic or
physical mode, as per the preference of the client.

5. Whether Exchange Members are required to preserve copies /evidences of receipt of such
consent of client for trading in Options Contracts?
Yes, they are required to preserve the consent of client and the evidences of such consent.

6. Can Exchange Members take consent from their clients using two-factor authentication
(2FA) solutions?
Yes, the client consent / undertaking can be taken using a two-factor authentication (2FA)
solution authorised by Member for all registered clients with a username & password.

7. Can Exchange Members receive this consent, by way of scanned copy of the duly signed
letter / undertaking by the client, through the registered email ID of such client?
Yes, the Member may receive the consent through registered email ID of the respective
client, by way of scanned copy of the duly signed letter / undertaking by client attached in
such email.

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Registered Office: 1st Floor, Akruti Corporate Park, Near G.E. Garden, LBS Road, Kanjurmarg West,
Mumbai 400 078, India.CIN No. U51909MH2003PLC140116

Phone: +91-22-6640 6789, Fax +91-22-6640 6899, Website: www.ncdex.com

NATIONAL COMMODITY & DERIVATIVES EXCHANGE LIMITED

Frequently Asked Questions – Member Inspection

However, the original copy of letter / undertaking has to be obtained by Member from all
such clients.

8. If the Exchange Member has already taken consent of clients for Commodity Futures or
Commodity Derivatives Contract, should the Member then take consent of clients for
trading in OPTIONS on Commodity Derivatives Exchanges?
Yes, it is advisable to take specific consent from clients because it is “Options on Commodity
Futures”.
Please note the below that it is “Options on Commodity Futures” that has been permitted
by SEBI vide Circular dated 13th June 2017 wherein the underlying of an Option contract will
be the “Commodity Futures” traded on the Exchange as may be permitted by SEBI

9. Existing clients with whom Exchange Members have already executed KYC, are they
supposed to execute fresh KYC for trading in Commodity Options Contracts?
No fresh KYC of existing clients is required for trading in commodity options contracts.

10. Any circular of the Exchange regarding Client Registration Documents for Commodity
Options Trading?
Please refer the Exchange circular no. NCDEX/COMPLIANCE-017/2017/266 dated October
10, 2017.

B. Contract Notes and Brokerage

1. What are the requirements of CTT applicability in commodity transaction?
Please refer the Exchange circular no. NCDEX/OPTIONS-011/2018/085 dated April 02, 2018.
Member shall pay applicable Commodity Transaction Tax (CTT) /Stamp Duty/ Goods &
Service Tax (GST) and other applicable statutory dues to respective authorities within the
timelines prescribed by the Exchange and / or any relevant authority from time to time.

2. What are the circulars which have to be referred with respect to Electronic Contract Notes?
Please refer the Exchange circular no. NCDEX/COMPLIANCE-015/2016/238 dated
September 27, 2016 on Regulatory framework for commodity derivatives brokers has made
applicable following SEBI circulars w.r.t. contract notes:
a) SMDRP/Policy/Cir-56/2000 dated Dec 15, 2000
b) SMD/SE/15/2003/29/04 dated Apr 29, 2003
c) MRD/DoP/SE/Cir-20/2005 dated Sep 8, 2005

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Registered Office: 1st Floor, Akruti Corporate Park, Near G.E. Garden, LBS Road, Kanjurmarg West,
Mumbai 400 078, India.CIN No. U51909MH2003PLC140116

Phone: +91-22-6640 6789, Fax +91-22-6640 6899, Website: www.ncdex.com

NATIONAL COMMODITY & DERIVATIVES EXCHANGE LIMITED

Frequently Asked Questions – Member Inspection

d) Clause 13 of Annexure A to MIRSD/ SE /Cir-19/2009 dated Dec 3, 2009

3. What is the maximum permissible brokerage amount?

Maximum limit on brokerage is not prescribed. However, Member should not charge excess
brokerage than that agreed with client.

4. Is it mandatory to show Brokerage amount separately on the contract notes?

Yes, the specified format for contract note requires brokerage amount to be shown
separately.

5. Is there any requirement of maintaining evidences of dispatch of contract notes to clients?

Yes

6. Are physical contract notes required to be issued in addition to digital contract notes?
Yes, Member shall send physical contract note within stipulated time in case of bounced
back of ECN mail

7. Can a member issue digital contract notes?

Yes. The digitally signed ECNs may be sent only to those clients who have opted to receive
the contract notes in an electronic form, either in the client registration document or by a
separate letter.

8. What is the requirement with respect to numbering the contract notes?

Contract note are required to be serially numbered beginning from one, which shall be reset
only at the beginning of the next financial year.

9. When are contract notes required to be issued /delivered to clients?

Contract notes are required to be issued to the clients within 24 hours of the commodity
derivatives transactions made by the client.

10. What is the format for issuing contract notes?

The contract notes should be issued as per the Exchange Circular No. NCDEX/COMPLIANCE-
003/2018/046 dated February 26, 2018. Format prescribed in the Exchange circular no.
NCDEX/COMPLIANCE-006/2017/136 dated June 9, 2017.

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Registered Office: 1st Floor, Akruti Corporate Park, Near G.E. Garden, LBS Road, Kanjurmarg West,
Mumbai 400 078, India.CIN No. U51909MH2003PLC140116

Phone: +91-22-6640 6789, Fax +91-22-6640 6899, Website: www.ncdex.com

NATIONAL COMMODITY & DERIVATIVES EXCHANGE LIMITED

Frequently Asked Questions – Member Inspection

C. Fund Management
1. What are the requirements with related to collection and reporting of margin requirement
from the clients?
Please refer the Exchange circular no. NCDEX/CLEARING-017/2016/212 dated September 8,
2016.

2. What are the requirement with respect to cash transaction?

Stock Brokers shall not accept cash from their clients either directly or by way of cash deposit
to the bank account of stock broker.

3. Are there any conditions for accepting client funds through Pay order/Demand
Draft/Electronic Fund transfer?
Please refer the Exchange circular no. NCDEX/COMPLIANCE-015/2016/238 dated
September 27, 2016 on Regulatory framework for commodity derivatives brokers has made
applicable SEBI circulars CIR/MIRSD/03/2011 dated Jun 9, 2011.

4. Can a member broker make inter client adjustment between inter family/group
company/related accounts for the settlement of the client account?
No

5. When are the clients’ credits balances required to be settled in case client has given
running account authorisation?
The settlement of funds/securities shall be done within 24 hours of the pay-out, unless client
specifically authorize the stock broker to maintain a running account.

Please refer the Exchange circular no. NCDEX/COMPLIANCE-015/2016/238 dated

September 27, 2016 on Regulatory framework for commodity derivatives brokers has made
applicable following SEBI circulars w.r.t. Running Account Settlement:
a) Clause 12 of Annexure A to MIRSD/ SE /Cir-19/2009 dated Dec 3, 2009
b) MIRSD /Cir/ 01/ 2011 dated May 13, 2011.

6. Is a member required to collect margin from his clients?

Yes. Please refer the Exchange circular no. NCDEX/CLEARING-017/2016/212 dated
September 8, 2016.

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Registered Office: 1st Floor, Akruti Corporate Park, Near G.E. Garden, LBS Road, Kanjurmarg West,
Mumbai 400 078, India.CIN No. U51909MH2003PLC140116

Phone: +91-22-6640 6789, Fax +91-22-6640 6899, Website: www.ncdex.com

NATIONAL COMMODITY & DERIVATIVES EXCHANGE LIMITED

Frequently Asked Questions – Member Inspection

7. Can a member broker utilize client funds for own use?

No. Please refer the Exchange circular no. NCDEX/COMPLIANCE-016/2016/239 dated
September 27, 2016.

8. Are members required to keep clients fund and own funds segregated?
Yes. Please refer the Exchange circular no. NCDEX/COMPLIANCE-016/2016/239 dated
September 27, 2016.

5/5

Registered Office: 1st Floor, Akruti Corporate Park, Near G.E. Garden, LBS Road, Kanjurmarg West,
Mumbai 400 078, India.CIN No. U51909MH2003PLC140116

Phone: +91-22-6640 6789, Fax +91-22-6640 6899, Website: www.ncdex.com