Authorised Person

The Forward Markets Commission (FMC), in order to streamline the regulation of intermediaries in the Commodity Futures Market, has issued directives with regard to appointment and operations of Authorized Persons (AP).

A copy of FMC's regulatory framework governing market access through "Authorised Persons" is attached as Annexure I.

All appointments of Authorized Persons by any Member shall be in terms of the directives and regulatory framework of FMC. Members desirous of appointing Authorized Persons, shall seek prior written approval of the Exchange by submitting an application in the prescribed format (Annexure AP-1), along with the details as per the following formats of the Exchange:
  1. Annexure AP-2  -  Details of proposed Authorised Person;
  2. Annexure AP-3  - Details of the Individual/Directors/Partners/ Governing Body Members/ Managing Committee Members of the proposed Authorised Person;
  3. Annexure AP-4 Corp - Details of Shareholding Pattern of Authorised Person ( For Companies and Bodies Corporate/ Co-operative Society); or 
  4. Annexure AP-4 P'ship -  Details of Sharing Pattern of Authorised Person ( For Partnership Firm/LLP)
  5. Annexure AP-5 - Undertaking/Confirmation from the Member appointing the Authorised Person;
  6. Annexure AP-6 - Undertaking from the proposed Authorised Person
Please note that separate application should be submitted in the prescribed format along with applicable annexure, for each proposed case of appointment of Authorised Person. Further, the approval accorded by the Exchange and appointment shall be specific for each such Authorised Person.

On receiving approval of the Exchange, the Member is required to enter into agreement with the Authorised Person in the format prescribed (Annexure AP-7) and ensure to submit a certified true copy thereof to the Exchange, before permitting such Authorised Person to admit or introduce clients and accept orders from clients.

For cancellation of appointed Authorised Person, Members shall be required to make application as per attached Annexure AP-8.

The guidelines, stipulations and conditions prescribed by the FMC with regard to appointment of Authorised Person are self-explanatory (please see Annexure 1 ), and the Members should meticulously comply with the same. For ready reference, we give herein below some of the salient stipulations and conditions prescribed by the FMC vide said directives at Annexure-1 :

  1. On being appointed as Authorised Person of a Member of the Exchange, such person or entity shall not, during continuation of being an Authorised Person of such Member, qualify for becoming Authorised Person of another Member of the Exchange.
  2. No director or partner of any Member of the Exchange shall be eligible to become an Authorised Person of any other Member of the Exchange.
  3. An Authorised Person shall not receive or pay any money or deal in deliveries of commodities in its own name or account. All receipts and payments of money and dealings in commodities shall be in the name or account of the concerned Member.
  4. An Authorised Person shall receive his/its remuneration-fees, charges, commission, salary etc for his/its services only from the Member of which he/it is an Authorised Person and he/it shall not charge any amount, under whatever head, from the clients of the Member.
  5. All acts of omission & commission of the Authorised Person shall be deemed to be those of the Member and the Member shall be liable for consequences of all such acts including the liabilities there from.
  6. The permission granted by the  Exchange to the Member, for any Authorised Person is only to facilitate the Member to trade on the Exchange platform through person authorised by the Member and such permission shall not be construed in any manner whatsoever to waive, reduce or affect the liability and responsibility of the Member in such matter.
  7. The Member shall enter into written Agreement as per Exchange prescribed format (Annexure AP-7) with each of such Authorised Person after receipt of communication of acceptance / approval of such Authorised Person by the Exchange. The Member shall permit the Authorised Person to admit or introduce clients and accept orders from the clients on their behalf only after execution of the agreement as mentioned above (and after submission of a certified true copy of the signed Agreement to the Exchange). 
  8. The Member shall be responsible for all acts of omission and commission of his/its Authorised Person and/or Authorised Person's/their employees, including liabilities arising there from.
  9. If any trading terminal is provided by the Member to an Authorised Person, the place where such trading terminal is located shall be treated as branch office of the Member.
  10. The Member shall display at each such branch office, additional information such as, particulars of Authorised Person in-charge of that branch, terms & conditions of his/its appointment, time lines for dealing Authorised Person, etc. and as may be prescribed by the Exchange.
  11. The Member shall notify changes, if any, in the Authorised Person to all registered clients of that branch, at least 15 days before the change.
  12. The Member shall conduct periodic inspection of branches assigned to Authorised Persons and records of the operations carried out by them and as may be prescribed by the Exchange.
  13. It shall be the responsibility of the Member to audit the records of his/its Authorised Persons to ensure that they comply with the Rules, Bye-laws and Regulations of the Exchange.
  14. The clients dealing through Authorised Person shall be registered with the Member only. The funds, monies and commodities or warehouse receipts, as the case may be, of the clients shall be settled directly between the Member and the clients. No funds or commodities of the clients shall be transferred/deposited/credited into any account of Authorised Person.
  15. All documents like contract notes, statement of funds and commodities etc.  shall be issued by the Member to the client. Authorised Person may provide administrative assistance in procurement of documents and settlement, but shall not issue any document to client in his/its own name.
  16. On noticing irregularities, if any, in the operations of an Authorised Person, the Member shall forthwith seek withdrawal of approval (granted by the Exchange), withhold all moneys due to Authorised Person till resolution of client grievances,   alert the clients in this regard in the locations where Authorised Person operates, file a complaint with the police and take all measures as may be required to protect the interests of its clients and the market.
  17. Members shall ensure that no orders are executed at the Authorised Person's end before all documents as prescribed by the Exchange/FMC, Client Registration Form and Risk Disclosure Document are obtained from each such client.
  18. Uploading of details pertaining to the Unique Client Code (UCC) shall be the responsibility of the Member and the Authorised Person cannot create or allot UCC to any client.
  19. All documents as mentioned under items 17 & 18 above should be available with the Member for audit and inspection as and when required by the Exchange or FMC.

The Members are hereby notified that FMC has further advised that the Authorised Persons appointed by the members of Commodity Derivatives Markets are not permitted to use the words "Stock(s) or Security/Securities or Share(s)" in their names. The Members are requested to take note of the same and ensure strict compliance thereof.

Please note that the Exchange has the sole discretion to refuse grant of approval to any request from Member for appointment of Authorised Person or withdraw permission already granted at any time without assigning any reason.

Please click here for the Formats of the Application Form and other documents/undertakings.