Funds Settlement
1.
What are the Exchange Timings?a. The members can trade on the Exchanges from 10.00 A.M to 11.30 P.M. from Monday to Friday & 10.00 A.M to 2.00 P.M on Saturday. The market closing timings would be 11:55 PM in case of day light saving.
2.
Who would be the Clearing house for ACE?a. ACE would be looking into the clearing the trades and settlement of trades itself.
3.
What is Mark to Market (MTM)?a. Marking to market refers to the computation of the profits or loss that a Member realizes due to the continuous movement of price of the security.
4.
How is Mark to Market profit and loss calculated?a. In simple terms the mark to market would be computed as under
i. On the day of entering into the contract and the position left open, MTM is the difference between the entry value and daily settlement price for that day
ii. On any intervening days, when the Member holds an open position, MTM is the difference between the daily settlement value for that day and the previous day’s settlement price.
iii. On the expiry date if the Member has an open position, it is the difference between the final settlement price and the previous day’s settlement price.
Mark to Market profit and loss calculation Contract multiplier for the contract is 100
Day and Time Price in Rs MTM – Buyer MTM- Seller
Day 1 (11 AM) 100 – Entry Price
Day 1 (End of Day) 105 (105 – 100)*100
= +5*100 = 500
(100–105)*100 = -5*100 = -500
Day 2 (End of Day) 98 (98 – 105)*100
= -7*100 = -700
(105 – 98)*100 = +7*100 =700 Day 3 (Expiry/ Square
Off) 102 – Exit Price (102 – 98)*100 = 4*100 = 400 (98 – 102) *100 = - 4*100 = - 400 Cumulative MTM over a period of time = (+5-7+4)*100 = 2*100 = 200 = (-5+7-4)*100 = -2*100 = -200
5.
How is the MTM profit and loss settled?a. The daily profit/losses of the Members are calculated using the daily settlement price/ final settlement price (on expiry). The Daily Settlement price/ final settlement price (on expiry) notified by the Exchange shall be binding on all Members and their constituents. The daily MTM profit/loss made by the members for the day would be paid or collected by exchanges on the next settlement day.
The Members are intimated of the next day pay in/ pay out amount through the Obligation File. The pay in amount along with the old shortages of the member will also be informed to the clearing banks.
6.
What are the Settlement Timings?a. The following are the tentative timings for the settlements Particulars 1st Round 2nd Round 3
rd Round 4th Round 5th Round Margin Call 09:00 ABC PayOut 09:15 MTM Payin 09:30 11:00 13:00 15:30 17:00 MTM PayOut 12:00 Delivery Funds Payin 12:30 16:00 Delivery Funds PayOut 15:00 (also supplement ary pay-in / pay-out) Delivery Commodity Payin 12:15 (Physical) 12:30 13:30 Delivery Commodity PayOut 15:30 16:00 (Physical) 16:30 (with held release pay out)
7.
How many Bank Accounts are required?a. Members have to open the below mentioned account with any of the Empanelled banks for clearing purpose
Account to be opened by the member
i. Settlement Account - For Daily Pay-In & PayOut from the exchange
ii. Client Account – For making and accepting Pay-In & PayOut from the clients.
iii. Own Account – For Proprietary transaction
8.
When is the MTM profit/loss transaction generation done?a. Every day after closing of market hours during the End of Day process, MTM profit/Loss transactions are generated.
9.
What is Manual Bank Transaction (MBT)?a. MBT is the facility provided to the members for increasing the collaterals for trading purpose and fulfilling their MTM pay-in obligation. There are three parties to MBT i.e. the member, the bank and the Exchange.
10.
What is the process flow of Manual Bank Transaction (MBT)?a. The process flow of Manual Bank Transaction (MBT) Manual Bank Transaction (MBT) would include the following steps:
i. The member will place the request through C&S interface provided by the exchange.
ii. The bank will confirm or reject the transaction placed by the member after checking the availability of funds in members account.
iii. Finally, the exchange will verify and confirm the transaction and accordingly the exposure will be given to the member.
11.
Can a clearing member change his clearing bank?a. Yes, the clearing member can place the request for change in Clearing bank. The following documents are required to be submitted by the clearing member for change in clearing bank.
b. A request from the member seeking permission to close clearing accounts with existing clearing bank and to open new clearing accounts with another clearing bank.
c. No Objection Certificate (NOC) letter from his existing designated clearing bank.
d. Once the above documents are received, Exchange will issue an introductory letter for opening of new clearing accounts to the new bank.
An undertaking will be issued by the member to the new bank, authorizing the new bank to debit or credit the account from time to time in accordance with the instructions received from Exchange and also authorizing the new bank to report balances to Exchange.
Once the above procedures have been followed Exchange will issue letter of operation to the member intimating the date from which the new Settlement account will be operational. Member has to ensure that on the said date the settlement account is adequately funded.
12.
Does the exchange disable the member if he is unable to fulfill the MTM pay-in obligation in the first run?a. The member can bring in funds in the multiple runs held later during the day. If the member does not settle the MTM obligation before the cut-off time set by the exchange, the shortage would be blocked from his total available collateral until the member makes good the obligation. If after blocking of MTM payin the collateral falls below the margin requirement the member may go in square off mode.
