Do's and Don'ts

Dealing in Commodity Futures
DO'S
  • Read and keep yourself updated about the guidelines and circulars issued by and available on the websites of the Exchange and the Forward Markets Commission (FMC).
  • Refer to and understand all the provisions of Forward Contracts (Regulations) Act, 1952 and amendments thereof from time to time dealing with futures trading in goods / commodities, including provisions and rates relating to the sales tax, value added tax, APMC Tax, Mandi Cess and Tax, octroi, excise duty, stamp duty, etc., applicable on the underlying goods/commodity of any contracts offered for trading by UCX.
  • Read the circulars issued by UCX for commodity contracts and note the contract specifications of the commodity in which you want to trade. The contract specifications are subject to change from time to time.
  • Please be aware of all the factors that go into the mechanism of pricing, trading and clearing, before entering into buy and sell transactions.
  • In order to understand the commodity and parameters that impact on the trading and settlement of the commodity, please read the product note of the commodity in which you want to deal.    
  • Please understand the Delivery & Settlement Procedures of the commodity that you want to deal in the commodity futures market.
  • Study historical and seasonal price movements of the commodity that you want to deal in the futures market.
  • Keep track of Governments' Policy announcements from time to time of the commodity that you want to deal in the futures market.
  • Apply your own prudent judgment for investments in commodity futures and take informed decisions.
  • Comply with taxation and other Central Government/State Governments regulatory requirements.
  • Please go through all Rules, Bye Laws, Regulations Circulars and directives issued by UCX.
  • Since the investment in commodity futures market is based on various types of margins, be aware of the risks associated with your positions in the market and margin calls made from time to time.
  • Collect/Pay Mark-to-Market margins on your futures positions on a daily basis from/to your member/broker.
  • Be aware of your risk taking ability and fix stop-loss limits. Liquidate your positions at such levels to reduce further losses, if any.
  • In case of any doubt/problems, contact Exchange's Help Desk.
DONT'S
  • Do not fall prey to market rumours.
  • Do not go by any explicit/implicit promises made by analysts/advisors/experts/market intermediary until convinced.
  • Do not deal based on Bull/Bear run of commodity markets sentiments.
  • Do not go by the reports/predictions made in various print and electronic forms, without verification.
  • Do not trade on any product without knowing the risk and rewards associated with it.

Dealing with Members
DO'S
  • Trade only through registered members (Member) of the Exchange. Check with the Exchange to ensure that the member is registered with the Exchange.
  • Insist on filling up a standard 'Know Your Client (KYC)' form and on getting a Client- Id.
  • Insist on reading and signing standard 'Risk Disclosure Agreement'.
  • Cross check the genuineness of trades carried out at UCX through the trade verification facility available on UCX website. The trades can be verified online at ..........................(to be filled in) where trade information is available up to 3 working days from the trade date
  • While trading through an Authorized Person (AP) ensure that a duly signed contract note has been issued by the Member with whom such AP is associated for every executed trade, highlighting the details of the trade along with your unique Client-Id.
  • Obtain receipt for collaterals deposited with the Member towards margins.
  • Go through the Rules, Bye-laws, Regulations, Circulars, directives, notifications of the Exchange as well as those of the Forward Markets Commission/other Regulators, Governments and other authorities and details of Client-Trading Member Agreement to know your rights and duties vis-à-vis those of the Member.
  • Clearly state who will be placing orders on your behalf. Give precise and clear instructions while placing, modifying or cancelling orders.
  • Ask all relevant questions and clear your doubts with your Member before transacting
  • Ensure that the Contract Note issued to you by the Member contains all the relevant information such as Member Registration Number, Order No., Order Date, Order time, Trade No., Trade rate, Quantity, Arbitration Clause.
  • Insist on receiving the bills for every settlement.
  • Insist on periodical statements of your ledger account.
  • Scrutinize minutely both the transaction as well as the holding statements that you receive from your Depository Participant.
  • Keep Delivery Instruction Slips (DIS) book issued by DPs in safe and secure place/possession.
  • Ensure that the DIS numbers are pre-printed and your account number (Client- Id) is mentioned in the DIS book.
  • Freeze your Demat account in case of your absence for longer duration or in case of not using the account frequently.
  • Pay required margins in time and only by Cheque and ask for receipt thereof from the Member.
  • Deliver the goods/commodities in case of sale or pay the money in case of purchase, within the prescribed time.
DONT'S
  • Do not start trading before reading and understanding the Risk Disclosure
  • Agreement and entering into the prescribed constituent/client agreement with the Member.
  • Do not deal with unregistered intermediaries even if their charges are lower and/or margins are lesser.
  • Do not undertake off-market transactions in goods/commodities with a Member of the Exchange, unless such Member records in the agreement for sale, note or memorandum that he is selling/purchasing the goods/commodities as the case may be, for his own account and obtains your consent for the same as required u/s 15 (4) of the Forward Contracts (Regulation) Act, 1952.
  • Do not neglect to record in writing, orders for higher value given by you over phone.
  • Do not accept unsigned/duplicate contract note/confirmation memo.
  • Do not accept contract note/confirmation memo signed by any unauthorized person.
  • Do not get carried away by luring advertisements, rumours, hot tips, promise of unrealistic returns, etc.
  • Do not forget to take note of risks involved in the investments in commodity futures market.
  • Do not sign blank Delivery Instruction Slips (DIS) while furnishing securities deposits and/or keep them with Depository Participants (DP) or Member/broker in order to save time.