NATIONAL COMMODITY & DERIVATIVES EXCHANGE LIMITED
Circular to all trading and clearing members of the Exchange
Circular No: NCDEX/COMPLIANCE-008/2012/244
Date: July 07, 2012
Subject: Annual Compliance Report for FY 2011-12
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In terms of Regulation 6.2.2 of the Regulations of the Exchange, members are required to conduct an annual review of their business to assist them in complying with the provisions of the Bye Laws, Rules and Regulations of the Exchange. The review shall be structured in a manner that would assist them in detecting and preventing violations of compliance required by the Exchange.
Based on such a review, members whose memberships were activated on or before March 31, 2012are required to submit an Annual Compliance Report (ACR) for the year ended March 31, 2012(irrespective of the financial year followed by members) in the format enclosed to this circular. The ACR should be submitted to reach the Registered Office of the Exchange on or before August 31, 2012.
Members are directed to carry out the review with due care and diligenceand report all compliances correctly.Any incidence of wrong declaration in the ACRwould attract a penalty of Rs. 1,000/-per instance.
Failure to submit the ACR to the Exchange by August 31,2012, would be treated as non-compliance and attract a levy of late submission charge of Rs 100/- per day till the date of submission of ACR. The Exchange also reserves the right to take disciplinary action including levying of higher fines /penalties/ suspension of membership, for non-submission of ACR and/or wrong declaration therein.
For and on behalf of
National Commodity & Derivatives Exchange Limited
Sateesh Mahale
Vice President - Audit & Inspection Group
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For further information/clarifications, please contact Customer Service Group on Phone 022 - 6640 6609-12, 011- 2334 4795, Fax 022 - 6640 6899, E-mail
Annexure to Circular no NCDEX/COMPLIANCE-008/2012/244 dated July 07,2012
(To be given on the letter head of the Member)
Annual Compliance Report 2011 - 12
To
The Vice President
Audit & Inspection Group
National Commodity & Derivatives Exchange Limited
1st floor, Akruti Corporate Park
Near G.E.Garden, LBS Road
Kanjurmarg (West)
Mumbai 400 078
I/We, M/s. ______a Trading Member of the Exchange (TMID______) hereby certify and confirm that for the year/period ended March 31, 2012, have complied with all the provisions of the Bye Laws, Rules, Regulations, Circulars and Directives issued by the Exchange/Forward Markets Commission from time to time, in general and in particular all the specific areas listed in the Annexure of this Report. Details of non-compliance(s), deviation(s) and exception(s), if any, are also listed therein with appropriate remarks.
I/We, hereby declare that the details furnished in the Annexure are true and correct to the best of my/our knowledge and belief.
For and on behalf of ______
(Name of member, TMID)
Place: ______
Date : ______
Signature of Managing Director/Whole Time Director/ Managing Partner/Proprietor/Karta
Name: ______
Office seal
Email IDs
Annexure
Sr. No / Rule/Bye Law/Regulation / circular of the Exchange / Particulars / Status of compliance (Complied / Partially Complied/ Not Complied / Not Applicable) / Remarks (Reasons for partial / non-compliance, not applicable)Books of Accounts, Records and Documents
Regulation 7.1 / Books of accounts;- All Books of accounts, registers and records as required under the Regulations and showing Exchange wise segregation of transactions are being maintained and preserved for the prescribed period in respect of the Head office and Branches
Regulation 7.1 / Register or Ledger Account of Commodities, client wise and commodity wise, giving inter alia the following has been maintained a) date of receipt / delivery of commodity b) quantity received / delivered c) party from whom received / to whom delivered d) purpose of receipt / delivery
NCDEX/COMPLIANCE-011/2011/315 dtd. 13.10. 2011 / Separate Client Ledger Account: In case Member is holding concurrent Membership of Commodity Spot ExchangeCommodity Futures Exchange, Exchange-wise separate ledgersfor business done by clients has been maintained.
Regulation 6.3.para 1 / Member ConstituentAgreements (MCA): Member Constituent Agreements, containing all provisions specified by the Exchange, have been entered into with all the active constituents, before accepting or placing orders on their behalf.
Regulation 6.3 NCDEX/CSG-003/2011/346 dtd 28.11.2011 / Know Your Client (KYC) forms Client registration forms in respect of all clients including HUF clients completed in all respects with necessary supporting documents have been obtained. Details of the coparceners of all HUF clients have been collected in KYC forms & uploaded in UCC system of the Exchange.
NCDEX/MEMBERSHIP-001/ 2007/004 dtd 05.01.2007 & NCDEX/MEMBERSHIP-004/ 2007/068 dtd 26.03.2007 / Obtention of PAN details/Declaration Details of Income Tax PAN numbers or the declaration of not having PAN have been obtained from all active clients and uploaded
NCDEX/COMPLIANCE-001/ 2007/007 dtd 08.01.2007 / Obtention of Client Declaration on OpenInterest Positions The Client Declaration cum undertaking in the prescribed format has been obtained from all the clients.
NCDEX/COMPLIANCE-002/ 2007/080 dtd. 05.04.2007 / Client Awareness The Client Awareness declaration has been obtained from all the clients.
Regulation 6.3 / Approved Board Resolution permitting trading in derivatives from corporate constituents have been obtained.
Regulation 6.3 / Risk Disclosure Document (RDD) All constituents of the Exchange have been issued a copy of the Risk Disclosure Document as specified by the Exchange.
NCDEX/COMPLIANCE-004/ 2009/269 dtd. 01.10.2009 / KYC documents such as MCA, RDD, KYC Forms etc. required to be signed by clients do not contain inequitable, onerous or unreasonable conditions imposed on clients such as:-
(i) Waiver to the Member from sending contract notes;
(ii) Retaining the M-T-M (mark to market) gains by the Member with himself;
(iii) Any condition which gives the member the freedom to trade on behalf of the client without the explicit and specific order issued by the client
Banking Operations
Regulation 7.1. / Books of accounts, as are necessary, to show and distinguish, client funds and own funds in connection with our business as Member of the Exchange have been maintained.
Regulation 6.4 and 7.1 / Funds of the constituents have always been kept in a separate account and operation of such account has been as per provisions of Regulation.
Regulation 7.1 / No transfer / withdrawal from clients’ account is made except under the circumstances enumerated in Regulation
NCDEX/COMPLIANCE-005/ 2009/271 dtd. 05.10.2009
NCDEX/COMPLIANCE-009/2011/309 dtd. 07.10.2011 / All payments have been received/made from/to the clients strictly by account payee crossed cheques/ demand drafts or by way of direct credit into the bank account through EFT, or any other mode allowed by RBI. In case of pre-funded instruments e.g Demand Draft, if the aggregate value of the instrument is Rs.50,000 or more per client per day then the Bank certificate containing the name of the A/c holder, Number of the Bank Account debited for the purpose, duly certified by the issuing Bank is taken from the client.
In respect of electronic fund transfers, an audit trail ofthe funds received through such transfers have been maintained to ensure that the funds are received from their clients only.
NCDEX/LEGAL-005/2009/199 dtd 14.07.2009 / Receipts are issued to the clients clearly mentioning the name of the constituents for whose account Demand Draft / Pay Order has been accepted along with other details of Demand Draft / Pay Order e.g. amount, number, date of Demand Draft / Pay Order and the details of drawer bank. Duplicate copies of the receipts are maintained.
Dealings With Clients
Regulation 6.6 (e) / Funds/securities/commodities of constituents have not been improperly used by us or any person associated with us.
Regulation 5.6 / Brokerage has been charged separately and indicated separately from the price, in the contract note.
Regulation 6.4 / Full payment of funds has been made to all constituents within 24 hours of receiving the relevant pay out.
Regulation 7.1 and NCDEX/MEMBERSHIP-004/ 2004/134 dtd 23.09.2004 and NCDEX/CLEARING -026/ 2004/177 dtd 25.11.2004 / Unique client codes have been allotted to all clients and the correct client codes have been entered in the system while placing orders on behalf of clients. Client details as required have been maintained and have been provided to the Exchange as required.
NCDEX/CSG-002/2011/068 dtd. 11.03.2011 / The additional Client IDs of those clients who have been given more than one client ID has been frozen/deleted and no trading is carried out in such IDs
NCDEX/COMPLIANCE-010/2011/313 dtd. 11.10. 2011 / No trade has been carried out for any client without uploading the Unique Client Code details with the Exchange.
Regulation 7.1 and NCDEX/CSG-008/2008/236 dtd. 17.10.2008 / Mapping of the client codes used at the time of order entry in the trading system with unique code is maintained as prescribed by the Exchange.
Regulation 5.1 / Pay-in of funds and commodities due from clients is received from the respective clients only
Regulation 5.1 / Payout of funds and commodities due to the clients is made to the respective clients only
Regulations 5.1, 6.4 and 6.6 (e) / Commodities of the constituents have always been kept in a separate constituent beneficiary demat account and operation of such account has been as per provisions of Regulation.
Regulation 6.4 and NCDEX/COMPLIANCE-004/ 2009/269 dtd. 01.10.2009 / Trades of clients are executed only after keeping evidence of the client placing such order: it could be, inter alia, in the form of sound recording.
NCDEX/COMPLIANCE-004/ 2009/269 dtd. 01.10.2009 / All trades of clients are executed only after completing KYC formalities
Regulations 5.1 and NCDEX/LEGAL-010/2009/295 dtd. 23.10.2009 / Funds and commodities of one constituent have not been utilized for and on behalf of another constituent.
Regulations 6.6 and NCDEX/LEGAL-010/2009/295 dtd. 23.10.2009 / No discretionary powers in client’s account have been exercised except as provided in the Rules, Bye-laws and Regulations of the Exchange
Dealings with Intermediaries
Bye Law 8.7.2 / Brokerage has not been shared with another Member of the Exchange or an employee of another Member or a person with whom Members are forbidden to do business under the Rules, Bye Laws and Regulations of the Exchange.
Brokerage has not been shared with and/or business has not been transacted with any of the suspended or expelled or defaulting Members
Brokerage has been shared only with Authorised Persons
Rule 6.5 of the Exchange / No business has been done with or for the Members who are prohibited to transact, including suspended/expelled/ defaulter Members; defaulting constituents and employees of other Member
NCDEX/COMPLIANCE-006/2012/052 dtd. 14.02.2012 / All the guidelines and obligations relating to market access through Authorised Person have been fully complied with.
NCDEX/COMPLIANCE-008/2010/223 dtd. 28.08.2010 / There is no existing Authorised Person as on 28.08.2010 for whom fresh approval has not been obtained from the Exchange and has continued to carry on his trading activities as Authorised Person
NCDEX/COMPLIANCE-006/2012/052 dtd. 14.02.2012 / Audit of records of the Authorised Person/s has been carried to ensure that the Authorised Person/s comply with the Rules, Bye Laws and Regulations of the Exchange, where applicable.
Contract Notes
Regulation 5.5 and NCDEX/ COMPLIANCE-003/2011/126 dtd. 29.04.2011 / Contract Notes are dispatched within 24 hours of the transactions made by or on behalf of the clients and the proof of delivery of the same is preserved. Contract notes are issued in the prescribed format, with all relevant details filled in bearing signature of the authorised signatory bearing a running serial number which is initiated at the beginning of each financial year
NCDEX/COMPLIANCE-011/2011/315 dtd. 13.10. 2011 / In case Member is holding concurrent Membership of Commodity Spot Exchange Commodity Futures Exchange, separate contract notes have been issued for Commodity Spot Exchange & Commodity Futures Exchange.
NCDEX/ COMPLIANCE-003/2011/126 dtd. 29.04.2011 / Electronic Contract Note ‘declaration form’ has been obtained from client specifically indicating his preference for receipt of Contract Notes in electronic form. Further, this declaration needs to be obtained from the client afresh before 1st April of every financial year.
Regulation 7.1 &
NCDEX/COMPLIANCE-003/2011/126 dtd 29.04.2011 / A detailed statement of accounts is sent every month to all the clients in physical form & the proof of delivery of the same has been preserved.
NCDEX/ COMPLIANCE-004/2010/181 dtd. 07.07.2010 / Contract notes are delivered only at the addresses of the clients.
Regulation 7.1 / Copies/duplicates of Contract Notes issued by the Member are maintained.
NCDEX/LEGAL-005/2004/091 dtd 22.07.2004 and NCDEX/COMPLIANCE-003/2011/126 dtd. 29.04.2011 / Contract Notes are authenticated by digital signatures only after obtaining digital signature certificate from a Certifying Authority under the IT Act, 2000 and mode of confirmation by the client is specified in the agreement between the member and the client
Trades executed for a constituent have not been subsequently transferred to another constituent
NCDEX/TRADING-139/2011/374 dated 27.12.2011 / Trades executed for own account have not been subsequently transferred to a constituent and vice versa
NCDEX/TRADING-101/2011/277 dtd 08.09.2011 / Trades on own/proprietary account have been executed under PRO code only & no client code has been allotted for any proprietary trade.
Margins
Regulation 5.7 NCDEX/COMPLIANCE-001/2012/001 dtd. 02.01.2012 / Upfront margins are collected from the constituents correctly
Regulation 5.1 / Margins are collected from the director or an employee of the Member for all transaction entered into on behalf of the director or an employee of the Member or for transactions in which the director or employee has beneficial interest.
Regulation 5.7 / MTM settlement is collected from the constituents as prescribed
NCDEX/COMPLIANCE-011/2011/315 dtd. 13.10. 2011 / In case Member is holding concurrent Membership of Commodity Spot Exchange Commodity Futures Exchange, no cross margining has been allowed for exposure of a client across these Exchanges.
NCDEX/RISK-017/2011/184 dtd. 16.06.2011 / It is ensured that margins collected from clients are highly liquid and are owned by the depositing client
Membership Requirements
Membership Undertaking and NCDEX/ MEMBERSHIP-001/2010/217 dtd. 23.08.2010 / No change in share holding / profit sharing pattern of the corporate / firm including that of the Dominant Promoter Group or their shareholding interest has been undertaken without prior approval of the Exchange.
NCDEX/MEMBERSHIP-001/2012/024 dtd. 21.01.2012 & NCDEX/MEMBERSHIP-002/2012/143 dtd 16.04.2012 / No change in shareholding pattern leading to change in control of the Company/ change in proprietor has been undertaken prior to approval from Forwards Market Commission (FMC)
NCDEX/MEMBERSHIP-001/2012/024 dtd. 21.01.2012NCDEX/MEMBERSHIP-002/2012/143 dtd 16.04.2012 / No change in the constitution of Business or Change in the name of the Company/ Firm ,if any has been undertaken without the prior approval from the Forwards Market Commission (FMC)
NCDEX/MEMBERSHIP-008/ 2007/184 dtd. 27.07.2007 and NCDEX/ MEMBERSHIP-001/2011/051 dtd. 24.02.2011 / Net worth is being maintained above the minimum stipulated level at all times.
NCDEX/COMPLIANCE-011/2011/315 dtd. 13.10.2011 / In case Member is holding concurrent membership of Commodity Spot Exchange Commodity Futures Exchange, the capital adequacy net worth requirements prescribed by the Commodity Futures Exchanges have been met separately
Rule 6.5.8 of the Exchange and Circular No. NCDEX/LEGAL-003/2005/046 dated 24.02. 2005 / No advertisements have been released for business purposes contrary to the Guidelines issued by the Exchange.
Regulation 4.1 and Bye Law 6.7 of the Exchange / Member acting for another Member: We have not acted through or on behalf of another Member for trading on the Exchange either for proprietary trading or for trading on behalf of clients without the prior approval of the Exchange in writing
NCDEX/COMPLIANCE-007/2010/195 dtd. 22.07.2010 / We do not indulge in Portfolio Management Services (PMS)
NCDEX/CSG-001/2009/063 dtd 27.02.2009 / No orders have been placed for deleted client codes.
NCDEX/COMPLIANCE-006/ 2009/334 dtd. 25.11.2009 / Guidelines for Anti Money Laundering and Know Your Customer (KYC) Norms, including, intimation of details of the ‘Principal Officer’ to The Director-FIU and the Exchange have been understood and accordingly implemented.
NCDEX/MEMBERSHIP-004/2011/259 dtd. 19.8.2011 / The Compliance Officer has been appointed & details of the same including appointment & change in the same,if any, has been intimated to the Exchange in the enclosed format.
NCDEX/COMPLIANCE-006/ 2009/334 dtd. 25.11.2009 / The cash transaction report (CTR) and the Suspicious Transaction Report (STR) is submitted, wherever applicable, to FIU-IND as per the format.
NCDEX/COMPLIANCE-002/2011/118 dtd. 26.04.2011 / Member or any of its subsidiaries /parent company/ related entities
have not undertaken any kind of BPO/KPO activities in which services are provided to foreign clients trading on foreign commodity exchanges.
Office Management
Regulation 4.2 / Trading terminals are operated by the respective approved users only. Whenever an Approved User of the Member ceases to act in such or any capacity with the Member then each such Member shall inform the Exchange, within 24 hours, the name and other particulars of such Approved User
Regulation 4.1 / TWS terminals have not been extended /installed without the approval of the Exchange.
NCDEX/TECHNOLOGY-015/2010/310
dtd 09.12.2010 / The details of all CTCL Terminals with correct terminal Id including additions, modifications, and disablements of the same,if any, have been submitted to the Exchange in the prescribed format.
NCDEX/TECHNOLOGY-002/2011/052 dtd. 25.02.2011 / Prior written permission of the Exchange is taken in case of any changes in the software have been undertaken for availing automated trading facility through CTCL.
NCDEX/MEMBERSHIP-003/2011/226dtd 25.07.2011 / At-least two users are NICR/NCFM certified.
Regulation 4.2 / No former Member or a user of such Member has been appointed as a user by us without the approval of the Exchange.
Regulation 4.2 / Trading system of the Exchange has not been accessed through any other Member or any other used id not allotted to us
Regulation 4.2 / We have neither aided nor facilitated to access the trading system from a location other than our approved location, without the approval of the Exchange.
Regulation 6.1 / No activity connected to or pertaining to our operations as Member of the Exchange has been carried on in any office or premises without intimating the Exchange the full address of such office or premises with details of the activity proposed to be carried on therein and the person in whose supervision and control it is to be so carried on.
NCDEX/MEMBERSHIP-007/ 2005/263 dtd 24.11.2005 and NCDEX/MEMBERSHIP-009/ 2008/264 dtd. 21.11.2008 / We have obtained valid Members' Fidelity Insurance cover.
NCDEX/COMPLIANCE/002/2006/238 dtd 19.09.2006 / Display of Details at Member’s Office The prescribed details are prominently displayed at the Member’s main/ branch office as also at the offices of the Authorised Persons
Others
Regulation 7.1 / After the closing of any constituents account all records which relate to the terms and conditions with respect to the opening and maintenance of such account, date of entering into agreement with the constituents, date of modification thereof, date of termination and representatives of such constituents who signed in each case are being maintained for a period of not less than six years.
Regulation 7.1 / Records of all relevant particulars of persons who are approved as users by the Exchange have been maintained.
Regulation 6.2.1 / An internal record of the names of all the people who are designated as supervisory personnel and the date from which such designation is or was effective have been maintained.
Regulation 6.2.1 / All persons who are transacting on our behalf have been specifically authorised in writing to do so and such power of attorney has been made available to the Exchange before such person transacts any business on the Exchange
Regulation 6.2.2 / Internal Inspection
Internal review of our business, to assist in detecting and preventing violations of and achieving compliance with Rules, Bye Laws and Regulations of the Exchange, has been undertaken.
Regulation 7.1 / Investor Grievances
Record of all written complaints of constituents showing the name and reference number of constituent, date, particulars of the complaint, action taken by us and if the matter is referred to arbitration to the Exchange, the particulars thereof, etc. have been maintained
NCDEX/ MEMBERSHIP-002/2009/355 dtd. 18.12.2009 and NCDEX/MEMBERSHIP-002/2010/224 dtd. 31.08.2010 / Monitoring of inactive clients
- No trades are accepted in Inactive Client accounts without obtaining undertaking for reactivation of client trading account
- Trades are executed in the same client code i.e. the client code issued earlier to the concerned client.
Clearing & Settlement Operations – For STCMs
NCDEX/ MEMBERSHIP-008/2008/262 dtd 17.11.2008
and NCDEX/ MEMBERSHIP-001/2011/051 dtd 24.02.2011 / Initial / Exposure margins and MTMs are collected correctly from the affiliated TMs/TCMs
NCDEX/ MEMBERSHIP-008/2008/262 dtd 17.11.2008 / Money of affiliated TMs/TCMs has always been kept in separate bank A/c
For and on behalf of ______