Medium Staple Cotton Product Document

Transcription

1 Table of Contents Chapter Trading conditions...3 Authority...3 Unit of Trading...3 Months Traded In...3 Tick Size...3 Basis price...3 Hours of Trading...3 Last Day of Trading...4 Mark to Market...5 Position Limits...5 Margin Requirements...5 Pre-Expiry Additional Margin.5 Delivery Margins...6 Penalty for cash settlement 6 Arbitration...6 Chapter Delivery Procedures...7 Unit of Delivery...7 Delivery Size...7 Quality Standards...7 Accredited Warehouse...7 Medium Staple Cotton Delivery...7 Packaging...8 Standard Allowances..8 Good / Bad delivery Norms...8 Quality Testing of Cotton...9 Quality Testing report...9 Medium Staple Cotton Sampling...9 Accredited Assayer 10 Assayer certificate Weight...10 Testing Procedure...10 Validity Period.11 Electronic transfer...11 Delivery Allocation.11 Actual delivery 11 Charges...12 Duties & Levies 12 Stamp Duty..12 Taxes.12 Premium / Discount...13 and be read therewith

2 Chapter Clearing and Settlement...14 Daily Settlement...14 Daily Settlement Prices...14 Final settlement...14 Spot Prices...14 Dissemination of Spot Prices..15 Pay in and Pay out for daily settlement / final cash settlement...15 Pay in and Pay out for final physical settlement...15 Exhibit 1 Medium Staple Cotton Contract Note...17 Exhibit 3 - Warehouse Address Details...19 Exhibit 4 - Good / Bad delivery norms Exhibit 5 Specimen of Cotton testing report...21 and be read therewith

3 Chapter 1 Trading conditions Authority Trading of Medium Staple Cotton futures may be conducted under such terms and conditions as specified in the Rules, Byelaws & Regulations as well as directions of the Exchange. A specimen of the Medium Staple Cotton futures contract is indicated in Exhibit 1. Unit of Trading The unit of trading for Medium Staple Cotton shall be 93.5 Quintals (=55 Bales of 170 kg each). Bids and offers may be accepted in lots of 93.5 Quintals (= 55 Bales of 170 kg each) or multiples thereof. Months Traded In Trading in Medium Staple Cotton futures may be conducted in the months as specified by the Exchange from time to time. Tick Size The tick size of the price of Medium Staple Cotton shall be Re. 1. Basis Price/ Unit for Price Quotation The unit for Price quotation for Medium Staple Cotton shall be in rupees per quintal, basis Abohar, exclusive of all taxes. Hours of Trading The hours of trading for futures in Medium Staple Cotton shall be from 10:00 a.m. to p.m Indian Standard Time (IST). with a break between 5.00 p.m. to 5.30 p.m. on all business days or as determined by the Exchange from time to time. The hours of trading for futures in Medium Staple Cotton on all Saturdays shall be from 10:00 a.m. to 2.00 p.m. or as determined by the Exchange from time to time. On the Expiry Date, contracts expiring on that day will not be available for trading after 5.00 p.m. and be read therewith

4 Last Day of Trading No trades in Medium Staple Cotton futures deliverable in the current month shall be made after 5.00PM on the 20 th calendar day of that month, if 20 th happens to be a holiday or a Saturday, then the previous working day. During last three trading days before the expiry of the contract including the date of expiry of contract, buyers and sellers having open positions would be required to indicate delivery information for receiving or giving. Delivery on the expiry of the contract, if any sellers having open position desires to give physical delivery at a particular delivery center, then the buyer with corresponding open position shall be bound to settle by taking physical delivery. NCDEX would thereafter complete the matching process based on the location and then by random, keeping in view the storage capacity of warehouse and Medium Staple Cotton already deposited / dematerialized for delivery or any other factor(s) that the Exchange deems appropriate for completion of the matching process. The settlement for sellers having open positions and not providing information for physical delivery of Medium Staple Cotton shall be completed by cash settlement payable by the sellers in the open position who do not provide delivery information as prescribed above. Mark To Market The outstanding positions in futures contract in Medium Staple Cotton would be marked to market daily based on the Daily Settlement Price as determined by the Exchange. Position limits The member wise position limits will be a maximum of Rs. 40 crore or 15% of open interest whichever is higher. The Client wise position limits will be maximum of Rs. 20 crores or 10% of open interest whichever is higher. Both position limits will be subject to NCDEX Regulations and directions from time to time. Margin Requirements NCDEX will use Value at Risk ( VaR) based margin calculated at 99% confidence interval for one day time horizon. NCDEX reserves the right to change, reduce or levy any additional margins including any mark up margins. Pre-Expiry Additional Margin There will be an additional margin imposed for the last 5 trading days, including the expiry date of the Medium Staple Cotton contract. The additional margin will be and be read therewith

5 added to the normal exposure margin and will be increased by the 1 % everyday for the last 5 trading days of the contract. All provisions relating to additional margin as contained in our Circular No NCDEX/ RISK/2003/1 dated December 2, 2003 shall apply to the above stated additional margin. Delivery Margins In case of open positions materializing into physical delivery, delivery margins as may be determined by the Exchange from time to time will be charged. The delivery margins will be calculated based on the number of days required for completing the physical delivery settlement (the look-ahead period and the risks arising thereof). Penalty for cash settlement A penalty will be imposed on sellers with open position who chose not to deliver the commodity. The penalty amount will be 1% of Final Settlement Price as provided in our Circular No. NCDEX/RISK-013/2004/194 dated December 22, Ten percent (10%) of the penalty amount shall be retained by the Exchange and the balance ninety percent (90%) shall paid to the buyers to whom the deliveries have not been paid. Arbitration Disputes between NCDEX members inter-se and between members and constituents, arising out of or pertaining to trades done on NCDEX shall be settled through arbitration. The arbitration proceedings and appointment of arbitrators shall be as governed by the Bye-laws and Regulations of NCDEX. and be read therewith

6 Chaptter 2 Delivery Procedures Unit of Delivery The unit of delivery for Medium Staple Cotton shall be 93.5 Quintals (=55 Bales of 170 kg each) Delivery Size Delivery is to be offered and accepted in lots of 93.5 Quintals (= 55 Bales of 170kg each. Weight variation of +/-10 % for each bale is acceptable subject to overall acceptable limit of quantity variation) or multiples thereof. A quantity variation of +/- 3% is permitted as per contract specification. Quality Standards The contract grade for delivery of Medium Staple Cotton futures contracts made under NCDEX Regulations shall be Medium Staple Cotton (Cotton traded as J-34 (SG) ) conforming to the quality specification indicated in Exhibit 2. No lower grade /quality shall be accepted in satisfaction of contracts for future delivery except as provided in the contract specifications. Delivery of higher grade would be accepted with premium. Accredited Warehouse NCDEX has accredited warehouse for receipt and delivery of Medium Staple Cotton. Receipt and delivery of Medium Staple Cotton will be undertaken only from the accredited warehouse as per Exhibit 2. Medium Staple Cotton Delivery Medium staple cotton delivered by sellers at the NCDEX designated warehouse will be accepted and stored subject to adherence of quality specification indicated in the futures contract. For the purpose of quality testing, samples will be drawn from the cotton delivered at the designated warehouse. Like wise, Medium Staple Cotton delivered to buyers will be from the above warehouse only. and be read therewith

7 Packaging Medium staple cotton bales delivered should be well compressed and packed as per standard industry methods preferably with white twill cloth (woven cloth) and adequate spiral bands. All sides of the packaging material may be stitched manually. The bales delivered should not bear any stains or be contaminated with any other foreign matter. Standard Allowances Sample weight per validation of quality 5 Kg on account of sample testing At the time of deposit: The quantity credited will be the actual quantity delivered at the tested moisture level, after providing for standard allowances on account of sampling. At the time of withdrawal / revalidation: The weight of lot delivered / revalidated at the time of withdrawal/revalidation shall be adjusted to moisture level at the time of deposit/revalidation whichever is later and such adjustment shall be over and above the standard allowances mentioned above. Good / Bad delivery Norms Medium Staple Cotton delivery into NCDEX designated Warehouse would constitute good delivery or bad delivery based on the good / bad delivery norms as per Exhibit 3. The list contained in Exhibit 3 is only illustrative and not exhaustive. NCDEX would from time to time review and update the good / bad delivery norms as per the trade / industry practices. Quality Testing of Cotton Samples will be drawn by SGS and sent for Subjective and Objective testing. Objective testing of Medium Staple Cotton will be done for 5 different parameters VIZ Staple Length, Micronaire, Strength, Moisture and Trash Content by CIRCOT. The cotton controller appointed for sampling (indicated in Exhibit 5), will draw samples of 1 Kg. A minimum of 5 samples per delivery lot will be drawn for testing, and arrange to have the same sent to cotton testing laboratory, packed in sealed plastic bags for quality testing. Subjective grading will be done by SGS cotton classers. and be read therewith

8 Quality Testing Report The test report issued by the cotton testing laboratory on the samples drawn shall be acceptable and binding on all parties. A specimen of the quality testing report is indicated in Exhibit 5. Medium Staple Cotton Sampling Sample of 5 Kg. will be drawn from 1 bale randomly of Medium Staple Cotton from every delivery lot of 55 Bales received at the designated warehouse. The sample portions drawn will be packed in clean and dry plastic bag or any other standard material & marked to recognize NCDEX member identity, quantity, date, time etc. The cotton samples drawn will be dispatched to the testing laboratory. Samples drawn will be equated into five parts., one part as Depositor sample, one part will be kept at Warehouse, third will be with CIRCOT the fourth part shall be provided to Cotton Classer and the fifth will be with SGS for records. Accredited Assayer NCDEX has appointed the Assayer for quality testing and certification of Medium Staple Cotton received at the designated warehouse. The quality testing and certification of Medium Staple Cotton will be undertaken only by the appointed Assayer. The assayer details are given in the Exhibit 3 alongside the warehouses. Assayer Certificate Testing and quality certificate issued by NCDEX appointed Assayer for Medium Staple Cotton delivered at designated warehouse in Abohar and at such other locations announced by the Exchange from time to time shall be acceptable and binding on all parties. Each delivery of Medium Staple Cotton at the warehouse must be accompanied by a certificate from NCDEX appointed assayer in the format as per Exhibit 4. Weight The bales of Medium Staple Cotton received and / or delivered at the NCDEX designated warehouse would be determined / calculated by the weighbridge / weigh scale at the premises of the designated warehouse and would be binding on all parties. Testing Procedure and be read therewith

9 Delivering members of medium staple cotton at the designated warehouse to take note that cotton samples for testing are dispatched to the testing laboratory. In view of the time taken for sampling, dispatch and receipt of the test report from testing laboratory, delivering members are advised to effect delivery of cotton bales at the earliest. An illustration of expected time taken for receipt of cotton bales at the designated warehouse, sampling, testing and receipt of test report is indicated below: S. No. Activity day Activity 1 Day 1 a) Delivery of cotton b) Sampling and dispatch to testing laboratory. 2 Day 3 Receipt of cotton at testing laboratory 3 Day 4 Conditioning of cotton at Lab. premises 4 Day 5 Testing and availability of report of cotton Validity period The validity period for Medium Staple Cotton is 2 months or till the first withdrawal from the warehouse whichever is earlier. Electronic transfer Any buyer or seller receiving and or effecting Medium Staple Cotton would have to open a depository account with an NCDEX empanelled Depository Participant (DP) to hold the Medium Staple Cotton in electronic form. On settlement, the buyer s account with the DP would be credited with the quantity of Medium Staple Cotton received and corresponding seller s account would be debited. The Buyer wanting to take physical delivery of the Medium Staple Cotton holding has to make a request to in prescribed form to his DP, with whom depository account has been opened. The DP would route the request to the warehouse for issue of the physical commodity i.e. Medium Staple Cotton to the buyer and debit his account, thus reducing the electronic balance to the extent of Medium Staple Cotton rematerialized. Delivery Allocation The Exchange would compile delivery information received from the selling members on the last trading day, i.e. 20 th of the month or such other day as specified in Chapter I above. The buyers who have to receive delivery would be notified on the same day after the close of trading hours. Delivery of Medium Staple Cotton is to be accepted by buyers at the accredited warehouse where the seller effects delivery in accordance with the contract specifications. and be read therewith

10 Actual Delivery Where Medium Staple Cotton is sold for delivery in a specified month, the seller must have requisite electronic credit of such medium staple cotton in his Clearing Members Account before the scheduled date of pay in. On settlement, the buyer s Clearing Member Pool Account would be credited with the said delivery quantity on pay out. The clearing member is expected to transfer the same to the buyers depository account. However, the buyer must take actual physical delivery of medium staple cotton before expiry of the validity date as indicated in the quality test report/assayer s Certificate of the Assayer or get the same revalidated. Charges All charges and costs payable at the designated warehouse towards delivery of medium staple cotton including sampling, grading, weighing, handling charges, storage etc. from the date of receipt into designated warehouse up to date of pay in & settlement shall be paid by the seller. All charges and costs after the pay out shall be borne by the buyer. Warehouse storage charges will be charged by the respective Depository Participant. Any other local charges such as handling costs etc. should be settled directly between the parties. The Assayer charges for testing and quality certification should be paid to the Assayer directly at the delivery location either by cash / cheque / demand draft. Duties & levies All duties, levies etc. up to the point of sale will have to be fully borne by the seller and shall be paid to the concerned authority. All related documentation should be completed before delivery of medium staple cotton into the NCDEX accredited warehouse. Stamp duty Stamp duty is payable on all contract notes issued as may be applicable in the State from where the contract note is issued. The rate of stamp duty payable depends on place of issuance of contract note by the member. and be read therewith

11 Taxes Service tax Service tax will be payable by the members of Commodity Exchanges on the brokerage charges charged by them from their clients on account of dealing in commodities. Purchase Tax / VAT Purchase tax is applicable and required to be paid by the receiving constituents / member (purchaser) of Medium Staple Cotton on contracts resulting in physical delivery at Abohar (Punjab ). A member and or their constituents receiving delivery of medium staple cotton should register with the relevant tax authorities and effect payment of purchase tax to the appropriate authority. There will be no exemptions on account of resale or second sale in VAT regime. Premium / Discount Premium & Discount on the Medium Staple Cotton delivered will be provided by the Exchange on the basis of quality specifications: The exchange will communicate the premium / discounts amount applicable before the expiry of the contract. Such amount will be adjusted to the members account through the supplementary settlement schedule. In Medium Staple Cotton there are four quality parameters where premium/discount is applicable. The four quality parameters are Staple length, Micronaire, Strength and Grades. and be read therewith

12 Chaptter 3 Clearing and Settlement Daily Settlement All open positions of a futures contract would be settled daily based on the Daily Settlement Price. Daily Settlement Price & Final Settlement Price The Daily Settlement Price (DSP) is determined by the exchange at the end of every trading day. The DSP will be utilized for marking to market all open positions. The Final Settlement price (FSP) will be determined by the Exchange on maturity of the contract. Final settlement On expiry of the contract, the following types of open positions would be cash settled: a) Delivery information not provided. b) Unmatched delivery information The pay in and pay out in case of cash settlement would be 1 day after the expiry date of the contract ( E+1 ) as per settlement calendar issued by the Exchange. The open positions for which information have been provided for and the same have been matched by the Exchange, would result in physical delivery. Final settlement will be on (E+10) basis as per settlement calendar issued by the Exchange. Spot Prices NCDEX will announce / disseminate spot prices for Medium Staple Cotton relating to the designated delivery center and specified grade/ quality parameters determined through the process of polling a set of market participants representing different segments of the value chain such as traders, importers / exporters, processors etc. The polled prices shall be input to a normalizing algorithm (like bootstrapping technique) to arrive at a representative, unbiased and clean benchmark spot price for Medium Staple Cotton. The security of data and randomness of polling process will ensure transparency and correctness of prices. The Exchange has absolute right to modify the process of determination of spot prices at any time without notice. and be read therewith

13 Dissemination of Spot Prices Spot prices for Medium Staple Cotton will be collected and disseminated on daily basis. Pay in and Pay out for daily settlement / final cash settlement The table below illustrates timings for pay in and pay out in case of daily settlement as well as cash settled positions for final settlement. The buyer clients would have to deposit requisite funds with their respective Clearing Member before pay in. All fund debits and credits for the Member would be done in the Member s Settlement Account with the Clearing bank. Time (E+1) On or before hrs After hrs Activity PAYIN: Debit paying member a/c PAYOUT: Credit receiving member a/c Pay in and Pay out for final physical settlement The table below illustrates timings for pay in and pay out in case of positions marked for physical settlement. The buyers / sellers would have to deposit requisite funds / Medium Staple Cotton with their respective Clearing member before pay in. Pay in and Pay out for Final Settlement in case of physical deliveries Time (E+10) Activity On or before hrs PAYIN: Debit Buyer Member Settlement a/c for funds Debit Seller Member s CM Pool Account for Medium Staple Cotton. After hrs PAYOUT: Credit Seller Member Settlement a/c for funds Credit Buyer Member s CM Pool Account for Medium Staple Cotton. The supplemental settlement for Medium Staple Cotton futures contracts to include premium / discount adjustments for quality of Medium Staple Cotton delivered and close out for shortages, will be conducted on the same day. Clearing members are required to maintain adequate fund balances in their respective accounts. Pay in and Pay out for supplemental settlement Time (E + 10) Activity On or before hours PAY IN: Debit Member Settlement a/c for funds After hours PAY OUT: Credit Member Settlement a/c for funds and be read therewith

14 Exhibit 1 Medium Staple Cotton Contract Note MEDIUM STAPLE COTTON FUTURES CONTRACT SPECIFICATIONS Type of contract Medium Staple Cotton Futures Contract Name of commodity Medium Staple Cotton (All cotton traded as J 34(SG )) Ticker symbol COTMSCABH Trading system NCDEX s Trading System Basis Ex-warehouse Abohar, exclusive of all taxes Unit of trading 55 Bales with each bale of 170 kg(=93.5 Quintals) Delivery unit 55 Bales with each bale of 170 kg (=93.5 Quintals) Acceptable +/-10 % weight variation for each bale Quotation/base value Rs./Quintal Tick size Re.1.00 Quality specifications Medium Staple Cotton (All cotton traded as J 34(SG )) a.staple length: As per HVI mode of assaying i. Basis: 25.5 mm ii.tenderable Range: mm with no premium above 27 mm. b.micronaire: i. Basis: ii. Tenderable Range:3.5 5 c.strength: With ICC mode of assaying i.basis:21 G/Tex ii.tenderable Range:19 24 G/Tex d.grades: i.basis: Fine ii.tenderable range of grades: `Good to Fully Good, `Fully Good, `Fine, `Superfine, `Extra Superfine e.moisture: i.basis: %; ii.max. tenderable up to 11% moisture with discount in the ratio of 1:1. Quantity variation f. Trash content: i.basis: 4-5%, ii.max. tenderable up to 7% with discount in the ratio 1:1 Also tenderable below 4% trash with premium in the ratio of 1:1 +/- 3% for total weight of each deliverable lot and be read therewith

15 Trading and Delivery months Delivery center Also deliverable Trading hours February, April, June, August, October and December Abohar Sirsa, Sriganganagar Mondays through Fridays Morning Session a.m. to p.m. Pre-open Session 05:25 p.m. to 05:30 p.m. Evening Session p.m. to p.m. Saturdays a.m. to 2.00 p.m. On the expiry date, contracts expiring on that day will not be available for trading after 5.00 p.m. Delivery specification No. of active contracts Opening of contracts Due date/expiry date Upon expiry of the contracts, if any seller with open position desires to give delivery at a particular delivery center, then the corresponding buyer with open position as matched by the process put in place by the Exchange shall be bound to settle by taking physical delivery Minimum 2 contracts with a maximum of 12 contracts running concurrently The first set of contracts will be launched upon approval of the Forward Markets Commission Subsequently, trading in any contract month will open on the 21st day of the month. If the 21st day happens to be a non-trading day, contracts would open on the next trading day 20th day of the delivery month If 20th happens to be a holiday, a Saturday or a Sunday then the due date shall be the immediately preceding trading day of the Exchange Closing of contract Price band All open positions will be settled as per general rules and product specific regulations Limit of 10 per cent of the last traded price of previous trading day or as approved by the Relevant Authority of the Exchange from time to time Limits will not apply on the opening day of the new contract (as there would be no previous day price to base the freeze on the limits) on other days, if the limit is reached during the final 30 minutes of the Trading Hours and be read therewith

16 Position limits Member-wise: Max (Rs. 40 crore, 15% of open interest), whichever is higher Client-wise: Max (Rs. 20 crore, 10% of open interest), whichever is higher Exhibit 2 Warehouse/ Assayers Address Details Warehouse Address 1. The Haryana State Co op supply and Marketing federation Ltd, Industrial Area, 3 Raina Road, Near New Sabji Mandi, Sirsa, Haryana Assayer Address SGS India Pvt Ltd Mr Deepesh Govil Phone : JICS Logistics, Khoram Khan A Bihari Godown No 5 National Highway towards Abu Road, Palanpur, Gujarat. SGS India Pvt Ltd Mr Deepesh Govil Phone : Exhibit 3 - Good / Bad delivery norms No. Particulars Good / Bad delivery 1 Medium staple cotton quality not meeting futures Bad delivery contract specification. 2 Delivery at non designated warehouse. Bad delivery 3 Delivery before contract expiration. Good delivery 4 Delivery after pay in date / time. Bad delivery 5 Delivery of wrong product ( Eg.: Medium Staple Cotton Bad delivery instead of Medium staple cotton). 6 Delivery completed but without sampling & testing. Bad delivery 7 Delivery without weight certificate. Bad delivery 8 Weight of bales at NCDEX designated warehouse. Good delivery 9 Delivery not compatible to delivery size as mentioned in contract specification. Bad delivery and be read therewith

17 10 Delivery beyond specified working hours. Bad delivery 11 Delivery without proper documentation. Bad delivery 12 Delivery quantity is more than quantity to be delivered. Good delivery 13 Cotton bales weighed at other than designated warehouse weigh bridge / weigh scale. Bad delivery 14 Delivery of medium staple cotton found contaminated on visual inspection. Bad delivery 15 Delivery by unauthorized person / agent without proper identification Bad delivery 16 Bales drawn for the purpose of drawing the sample Good Delivery and be read therewith

18 Exhibit 4 Specimen of Cotton testing report Report Ref: Date: ANALYSIS: The above sample was analysed by us and the average results are as under Moisture, HVI & Trash Test Report Institute Sample No. Marked as 1. Moisture Test (IS 199: 1988) Moisture Content 2. High Volume Instrument (HVI) ICC Mode (ASTM D- 5867:1995) 2.5% span Length (mm) UR Micronaire (ug/in) Tenacity at 3.2 mm (g/tex) 3. Trash Test (CIRCOT SP-1 Method) Trash (%) Invisible Loss (%) Total Loss (%) Staple Length Strength Others Subjective Test Report Tests were carried out 65 +/ - 2% R.H & 27 +/- 2 C The material delivered by the above NCDEX member is in accordance with the specification provided by NCDEX and valid upto subject to appropriate storage. The goods delivered may be accepted. Verified by Page of (signature) Checked by (Technical officer In Charge) and be read therewith

19 and be read therewith