NATIONAL COMMODITY & DERIVATIVES EXCHANGE LIMITED Circular to all trading and clearing members of the Exchange Circular No. : NCDEX/TRADING-080/2014/192 Date : June 19, 2014 Subject : Modification in contract specifications - Brent Crude Oil (BRENTCRUDE) futures contract Trading and Clearing Members are requested to note that the Exchange, as per the Bye-laws, Rules and Regulations of the Exchange and with the approval of the Forward Markets Commission, has modified the contract specification in the Brent Crude Oil (SYMBOL: BRENTCRUDE) futures contract. The contracts expiring in the months of July 2014, August 2014 and September 2014 would be available for trading from June 20, 2014. Contracts for further expiries will be launched as per the enclosed contract launch calendar. The futures contract to be launched on June 20, 2014 shall be additionally governed by the Product Note as is notified on the Exchange Website under the Tab Products. Members and Participants are requested to kindly go through the same and get acquainted with the product launched and its trading and related process put in place by the Exchange. Members and participants are requested to note that Brent Crude Oil futures contract will be available for trading with modified contract specifications. The currency exchange rate (which will be fixed for the entire tenure of the contract) to be used for the contracts expiring in the month of July 2014, August 2014 and September 2014 are as follow; Brent Crude Oil Contracts July 2014 August 2014 September 2014 Currency Exchange rate (INR/USD) 60.4575 60.7200 61.0150 The above exchange rate will be used to arrive at the FSP of respective monthly contract. For example, August contract will be settled as; Brent Index published as on that day (i.e. expiry day of the contract on NCDEX) by Intercontinental Exchange (ICE) for a similar corresponding contract expiring on ICE X Rs. 60.7200. 1 / 6
Summary of modifications in contract specifications for Brent Crude Oil futures contracts expiring in July 2014 and thereafter is given in Annexure I. Modified contract specifications applicable for Brent Crude Oil futures contracts expiring in July 2014 and thereafter are given in Annexure II. The contracts and the transactions therein will be subject to Rules, Bye Laws and Regulations of the Exchange and circulars issued by the Exchange as well as directives issued from time to time by the Forward Markets Commission. It is clarified that it is the sole obligation and responsibility of the Members and market participants to ensure that apart from the approved quality standards stipulated by the Exchange, the commodity Brent Crude Oil deposited / traded / delivered through the Approved Storage Facility/Warehouse is in due compliance with all the applicable laws/registrations/licenses as may be required while dealing in the commodity Brent Crude Oil and as laid down by various statutory authorities like Ministry of Petroleum & Natural Gas, Import/Export Regulations, Weight & Measures, Fire Safety norms, Environmental norms etc., as also other State/Central laws and authorities issuing such regulations in this behalf from time to time, including but not limited to compliance of provisions and rates relating to Sales Tax, Value Added Tax(VAT), LBT, Octroi, Excise duty, Stamp duty, Service tax, etc. as applicable from time to time on the underlying commodity of Brent Crude Oil contract offered for deposit / trading / delivery and the Exchange shall not be responsible or liable on account of any non-compliance thereof. For and on behalf of National Commodity & Derivatives Exchange Limited Vivek Jalan Senior Vice President Business For further information / clarifications, please contact 1. Ms. Suchitra Mane - Phone no: 022-6640 6079 2. Customer Service Group on phone: 022 6640 6613-15 3. Customer Service Group by e-mail to : askus@ncdex.com 2 / 6
Annexure I Summary of Modifications in contract specifications Brent Crude Oil futures contracts Contract Specifications Final Settlement Price Modified Contract Specifications The Final Settlement Price (FSP) in Indian Rupees (INR) will be determined by the Exchange on maturity of the contract. The FSP will be the value of Brent Index published by Intercontinental Exchange (ICE) for a similar corresponding contract expiring on ICE. The exchange rate to be used as the conversion factor shall be the closing price of benchmark domestic currency derivative exchange on the preceding business day of the launch day and this USD-INR exchange rate will be applicable during entire tenure of the contract till the date of expiry. 3 / 6
Annexure II Modified Contract Specifications - Brent Crude Oil futures contract (Applicable for contracts expiring in July 2014 and thereafter) Type of Contract Name of Commodity Ticker symbol Trading System Unit of trading Maximum order size Delivery unit Quotation/base value Basis Futures Contract Brent Crude Oil BRENTCRUDE NCDEX Trading System 100 Barrels 5000 Barrels 50,000 Barrels Rs per barrel* Sullom Voe, Shetland Islands, United Kingdom exclusive of all levies and taxes. Tick size Re 1/- Quality specification Also Deliverable Quantity variation Delivery center Hours of trading Crude Type API Gravity Sulphur Content Brent 38.5 degrees 0.36% Crude Type API Gravity Forties 41.5-42.5 degrees Sulphur Content 0.25-0.3% Osberg 35.9 degrees 0.32% +/- 1% by volume Mumbai Port / Jawaharlal Nehru Port Trust (JNPT). The Buyer will be responsible for the freight cost, insurance, import duty and all other taxes & levies on actual basis. Freight and insurance will be paid on actual basis on production of satisfactory documentary evidence from the seller. As per directions of the Forward Markets Commission from time to time, currently - Mondays through Fridays: 10:00 AM to 11:30 PM 10.00 AM to 11:55 PM (during the US day light saving period) On Expiry Date at 11:30 PM / 11:55 PM* All Timings are as per Indian Standard Timings (IST) *during US day light saving period 4 / 6
Delivery specification Opening of contracts Due date/expiry date Closing of contract No. of active contracts Price limit The buyer and seller shall give intentions of taking/giving delivery through the delivery request window at least three trading days prior to the expiry of the contracts and such intentions can be given during 3 days which would be notified separately. This will be matched by the Exchange for physical delivery as per the process put in place by the Exchange. As per launch calendar As per launch calendar All open positions for which delivery intentions have not been received or for which delivery intentions have been rendered but remain unmatched for want of counterparty to settle delivery will be cash settled at the Final Settlement Price on the expiry of the contract. As per launch calendar Base daily price fluctuation limit is (+/-) 4%. If the trade hits the prescribed daily price limit, the price limits will be relaxed up to (+/-) 6% without any break/ cooling off period in the trade. In case the daily price limit of (+/-) 6% is breached, then after a cooling off period of 15 minutes, the daily price limit will be further relaxed up to (+/-) 9%. Trade will be allowed during the cooling off period within the price band of (+/-) 6%. In case of price movement in International markets which is more than the maximum daily price limit (currently 9%), the same may be further relaxed in steps of 3%. Member: 20,00,000 barrels or 15% of market wide open interest, whichever is higher. Client: 4,00,000 barrels. Position limits Special Margins The above limits will not apply to bona fide hedgers. For bona fide hedgers, the Exchange will, on a case to case basis, decide the hedge limits. Please refer to Circular No. NCDEX/TRADING-100/2005/219 dated October 20, 2005. In case of unidirectional price movement/ increased volatility, an additional/ special margin at such other percentage, as deemed fit by the Regulator/Exchange, may be imposed on the buy and the sell side or on either of the buy or sell sides in respect of all outstanding positions. Reduction/ removal of such additional/ special margins shall be at the discretion of the Regulator/Exchange. 5 / 6
Final Settlement Price The Final Settlement Price (FSP) in Indian Rupees (INR) will be determined by the Exchange on maturity of the contract. The FSP will be the value of Brent Index published by Intercontinental Exchange (ICE) for a similar corresponding contract expiring on ICE. The exchange rate to be used as the conversion factor shall be the closing price of benchmark domestic currency derivative exchange on the preceding business day of the launch day and this USD-INR exchange rate will be applicable during the entire tenure of the contract till the date of expiry. Minimum Initial Margin 5% Delivery logic Intention matching * 1 Barrel = 42 US gallons = 158.98 liters Launch calendar for Brent Crude Oil Contract Launch Date June 20, 2014 Contract Expiry Date July 16, 2014 August 14, 2014 September 15, 2014 July 17, 2014 October 16, 2014 August 18, 2014 November 13, 2014 September 16, 2014 December 16, 2014 6 / 6