Trading mechanisms at exchange and live trading - Faculty Development Program @IIPM Bangalore, Aug 2014

1. 8/9/2014 1www.marketcalls.in www.tradejini.com
Trading mechanism at EXCHANGE
Facultydevelopment program

2. • Futures Trader
• Author of www.marketcalls.in since Sep 2007
• Trading System Designer
• Does Trading & Financial Blogging
• More www.marketcalls.in/about
8/9/2014 2
About ME
www.marketcalls.in www.tradejini.com

3. • Why to Trade with MCX
• Market Participants in MCX
• Liquid and Illiquid Commodities.
• Market Timings
• Most Active Contracts
• Delivery Mechanism
8/9/2014 3
Agenda
www.marketcalls.in www.tradejini.com

4. 8/9/2014 4
MCX Trading Instruments
www.marketcalls.in www.tradejini.com

5. 8/9/2014 5
regulatory framework
www.marketcalls.in
MINISTRY OF
FINANCE
MCX
NCDEX
ACE UCX NMCE
FORWARD MARKET COMMISSION
(FMC)

6. 8/9/2014 6
MCX Market Share
www.marketcalls.in www.tradejini.com

7. 8/9/2014 7
daily turnover
www.marketcalls.in

8. 8/9/2014 8
Most active contracts
www.marketcalls.in www.tradejini.com

9. • Hedgers
• Speculators(Intraday,Positional, Swing Traders)
• Arbitrageurs
• Market Makers
• Investors
• Banks, FII’s, Mutual funds are currently not allowed
to participate in MCX Futures
8/9/2014 9
MARKET PARTICIPANTS
www.marketcalls.in

10. • Full Service Brokers – Percentage Based Brokerage
• Discount Brokers
o Pay Per order
o Pay Per Lot
o Unlimited Trading
8/9/2014 10
Type of Brokers
www.marketcalls.in

11. 8/9/2014 11
Algo Trading in MCX
www.marketcalls.in www.tradejini.com

12. 8/9/2014 12
Liquid Contracts
www.marketcalls.in www.tradejini.com

13. 8/9/2014 13
ilLiquid Contracts
www.marketcalls.in

14. 8/9/2014 14
Global market timings
www.marketcalls.in
TOCOM 5:30 AM - 12:00 PM,
1:30 PM - 7:30 PM
LME 12:30 PM
SHANGHAI 9:00 AM - 11:30 AM;
1:30 PM - 3:00 PM;
9:00 PM - 2:30 AM
MCX 10:00 AM - 11:30 PM
New York
COMEX 8:20 AM - 1:30 PM
GLOBEX 6:00 PM to 5:15 AM (ND)

15. 8/9/2014 15
Bid ASK Spread
www.marketcalls.in www.tradejini.com
)

16. 8/9/2014 16
Best 5 Bid-ASK offers
www.marketcalls.in

17. 8/9/2014 17
Base metals –key contract specification
www.marketcalls.in www.tradejini.com
Copper/
Copper Mini
Zinc/ Zinc
Mini
Aluminum /
Alumini
Nickel/Nickel
Mini
Lead/ Lead
Mini
Trading unit 1 MT/250 KG 5 MT/1MT 5 MT/1MT 250 KG/100 KG 5 MT/1MT
Quotation
base
` / kg
Contract
Month
Bi-Monthly Monthly
Expiry date Last day of month
Tick Size 5 paisa per kg 5 paisa per kg 5 paisa per kg 10 paisa per kg 5 paisa per kg
Profit/loss on
1 `
movement
1000/250 5000 /1000 5000 /1000 250/100 5000 /1000
Initial margin Minimum 5 % or based on SPAN whichever is higher
Max OI for
client
5000 MT 3600 MT 15000 MT 600 MT 1800 MT
Max OI
member
25000 MT or
15% of market
OI whichever is
higher
18000 MT or
15% of market
OI whichever
is
higher
75000 MT or 15%
of market OI
whichever
is higher
3000 MT or 15
% of the
market OI
position
whichever is
higher.
9000 MT or 15
% of the
market OI
position
whichever is
higher.

18. 8/9/2014 18
Base metals –key contract specification
www.marketcalls.in www.tradejini.com
Copper/ Copper
Mini
Zinc/ Zinc Mini
Aluminum /
Alumini
Nickel/Nickel
Mini
Lead/ Lead Mini
Max order size 70 100 150 24 100
Daily Price limit 4%
Delivery Logic Both Options
Due Date Rate
Due Date Rate is
calculated on the
Last Day of the
Contract expiry,
by taking the
international spot
price of Copper
and it would be
multiplied by
Rupee-US$ rate
as notified by the
Reserve Bank Of
India.
Due Date Rate is
calculated on the
Last Day of the
Contract expiry,
by taking the
international
spot price of
Zinc and it
would be
multiplied by
Rupee-US$ rate
as notified by
the Reserve
Bank Of India.
Due Date Rate is
calculated on the
Last Day of the
Contract expiry,
by taking the
international
spot price of
Aluminum and it
would be
multiplied by
Rupee-US$ rate
as notified by the
Reserve Bank Of
India.
Due Date Rate is
calculated on
the Last Day of
the Contract
expiry, by taking
the international
spot price of
Nickel and it
would be
multiplied by
Rupee-US$ rate
as notified by
the Reserve
Bank Of India.
Due Date Rate is
calculated on
the Last Day of
the Contract
expiry, by taking
the international
spot price of
Lead and it
would be
multiplied by
Rupee-US$ rate
as notified by
the Reserve
Bank Of India.

19. • DELIVER LOGIC: -COMPULSORY DELIVERY – Any seller having open
position on the expiry date fails to deliver then a penalty of 6.5%
shall be imposed.
 Tender Period: - 1st to 6th day of the contract expiry month.
 Delivery Period: -1st to 6th day of the contract expiry month.
 Normal trading ends on the last day of the previous month prior to
• the expiry month.
8/9/2014 19
delivery procedure
www.marketcalls.in www.tradejini.com

20. • Pay-in of Commodities (Delivery by seller member): On the
Tender days by 6.00 P.M. except Saturday, Sunday and public
holiday.
• Pay- in of Funds: By 11:00 A.M. on Tender day + 1 basis.
• Pay-out of Funds and Commodities (Delivery to Buyer
Member): By 05:00 P.M. on Tender day +1 basis.
8/9/2014 20
delivery procedure
www.marketcalls.in

21. 1st Day: 5% Delivery period margin on an incremental basis over 5
days is levied on all the open positions.
Intention is received from buyers upto 6:00 pm and seller’s upto 6:00 pm.
Intention received from the buyers and sellers are matched and marked for
delivery after market close.
Delivery Order Rate: Settlement/closing price of the 1st day.
Before seller’s gives intention for the Delivery he has to deposit goods at
the designated clearinghouse of Group 4 Securitas along with all the
documents that is mentioned in the Contract specification, on the same
day.
The very next day marked buyer has to deposit the funds in the exchange
before payout, that fund will be transferred to seller in the evening.
8/9/2014 21
delivery procedure
www.marketcalls.in

22. • Close out of outstanding positions: All outstanding positions on the
expiry of contract not settled by way of delivery in the aforesaid
manner will be settled as per the Due Date Rate.
• DDR (Due Date Rate): DDR is calculated on 5th day or Expiry day
of the contract month. This is calculated by way of taking simple
average of last 3 days of the spot market of Ahmedabad.
• Taxes, duties, cess and levies: Ex-Ahmedabad, Inclusive of all
charges/levies relating to import duty, customs to be borne by
seller. But excluding Sales Tax/ VAT, any other additional tax or
surcharge on sales tax, local taxes and octroi to be borne by the
Buyer.
8/9/2014 22
delivery procedure
www.marketcalls.in www.tradejini.com

23. 8/9/2014 23
Thank you
www.marketcalls.in www.tradejini.com