QAre e-Series products compulsory demat contracts? Can I get physical warehouse receipts on these?
Yes. NSELís e-Series products are compulsory demat contracts. For taking delivery of such units, you need to have a demat account. Similarly, for selling these contracts, you must hold demat units in your beneficiary account.
QAre options also allowed in commodity derivatives?
Options in goods are presently prohibited under Section 19 of the Forward Contracts (Regulation) Act, 1952. No exchange or person can organize or enter into or make or perform options in goods. However the market expects the government to permit options trading in commodities soon.
QAre there any custody charges?
No. There are no custody charges for holding the demat units
QCan I take physical delivery of goods on surrendering demat units?
Yes. You can take physical delivery of goods on surrendering demat units anytime you like. The delivery locations and procedures related to physical delivery are specified in the respective product note.
QHow do I buy commodities in demat form?
You have to first register yourself as a client with any member of National Spot Exchange. You are also required to open a demat account with any of the DPs empanelled with NSEL. You can then place your order for e-Series products by making a telephone call to your broker or directly through online trading terminals.
QHow is the futures contract defined?
Gold Pure Mumbai 1-Kg future contract expiring on 20th Mar, 2006 is defined as "NCD-FUT-GLDPURMUMK-20-MAR-2006". Wherein "NCD" stands for NCDEX, "FUT" stands for Futures as derivatives product, "GLDPURMUMK" for underlying commodity and "20-MAR-2006" for expiry date.
QHow is the value of the trade calculated?
It is not necessary that the unit of quantity and price is the same. For eg. Price for Gold is expressed in Rs per 10 gms but the quantity is submitted in gms. Therefore the quantity can not be multiplied directly. The value of an order/trade can be computed by multiplying the quantity with the price and then the result by the 'multiplier'. For eg. Multiplier incase of Gold is 10.
QHow many days does it take to open a beneficiary account?
It takes at least 1 to 3 working days to complete all formalities of opening a beneficiary account
QI am an investor holding a demat account for equities. Do I have to open a separate demat account for trading on NSEL?
Yes. You have to open a separate demat account for NSEL as separate demat accounts are required for holding equities and commodities. However, if you have a demat account for trading on MCX, then the same account can be used for NSEL. However, if you have
QI have placed the square off order. Can I modify that order?
No, square off orders cannot be modified. You can always cancel the same and place another square off order.
QIs Sales Tax applicable on all trades?
If the trade is squared off sales tax is not applicable. The sales tax is applicable only if a trade results into delivery for the seller. Normally itís the sellerís responsibility to collect and pay the sales tax. The sales tax is applicable at the place of delivery.
QIs Sales Tax Registration Compulsory?
Those who want to give (seller) physical delivery need to have sales tax registration number.
QIs the concept of trading in commodity futures new in India?
Commodity futures market was very much there in earlier times in India. In fact it was one the most vibrant markets till the early 70s. But due to numerous restrictions the market could not develop further. Now that most of these restrictions have been removed, there is enormous scope for the development and growth of the commodity futures market in the country.
QIs the margin % uniform for all stocks?
It may not be so. Margin percentage may differ from commodity to commodity based on the risk involved in it, which depends upon its liquidity and volatility besides the general market conditions. But all contracts within the same underlying would attract same margin %.
QIs there any charge for opening a beneficiary account?
The charges are notified by the DPs to all the clients holding beneficiary account with them. The DPs normally charge Annual Maintenance Charges (AMC) and transaction charges on all debit instructions. It is similar to the practice followed in equity market
QIs there any difference between the procedures of opening pool and beneficiary accounts?
Yes. Members of the Exchange can open a CM pool account with any of the DPs empanelled with NSEL. The Exchange issues a member ID intimation letter to the member, which has to be submitted along with the request for opening a CM Pool Account. Clients are required to submit their KYC documents for opening a beneficiary account.
QWhat are commodity futures?
A commodity futures contract is an agreement between two parties to buy or sell the commodity at a future date at today's future price. Futures contracts differ from forward contracts in the sense that they are standardized and exchange traded. In other words, the parties to the contracts do not decide the terms of futures contracts; but they merely accept terms standardized by the Exchange.
QWhat are the commodities being traded on NSEL platform?
NSEL conducts spot trading in various agricultural and non-agricultural commodities, including gold and silver. The Exchange currently offers trading in 32 commodities. Contracts are designed and customised to fulfil the requirement of big corporates, traders and small farmers.
NSEL launched a new segment Ďe-Seriesí in 2010, which is exclusively designed to develop a cash segment in commodities. e-Gold was the first product to be launched under e-Series, followed by e-Silver, e-Copper and e-Zinc. e-Series products track prices of physical commodities. These are commodity investment products in demat, available in small denominations to enable commodity investment, in the form of SIPs (Systematic Investment Planning), for retail and investors and portfolio diversification for HNIs.
QWhat are the timings for trading in demat commodities on NSEL platform?
Trading in e-Series products can be done on any day of the week from Monday to Friday between 10:00 am and 11:30 pm. Trading in e-Series is not allowed on Saturdays and other holidays notified by the Exchange.
QWhat is a commodity market?
A commodity market facilitates trading in various commodities. It may be a spot or a derivatives market. In spot market, commodities are bought and sold for immediate delivery, whereas in derivatives market, various financial instruments based on commodities are traded. These financial instruments such as 'futures' are traded in exchanges.
QWhat is an "Underlying" and how is it different than "Contract"?
A commodity enabled for trading on futures is called an "Underlying" e.g. Pure Gold, Rubber. There may be various tradable contracts for the same underlying based on their different expiration period. For example NCD-FUT-RBRRS4KTM-20-Jan-2006, NCD-FUT-RBRRS4KTM-20-Feb-2006 are "contracts" available for trading in futures having Rubber as "underlying".
There can be more than one underlying for different grades and location (for price basis) of the same commodity. For Eg. COTJ34BTD is Cotton J34 grade Bhatinda location and COTLSCKDI is Long Staple Cotton grade Kadi location. Similarly, COTS06KDI and COTS06SRN are two underlyings for the same grade of cotton but have their prices quoted as per different locations.
QWhat is dematerialised or demat form of commodities?
Dematerialisation of commodities implies that these commodities are stored in Exchange-designated vaults/warehouses and the record of the ownership is in electronic form, just like trading in equity shares. The legal and beneficial owner of the goods gets a credit in his account electronically, which is similar to holding a pass book in the bank. Similarly, transfer of ownership against buy and sale is done from one account to the other, just like money transfer through a cheque. The depository keeps records of holding and transfers in electronic form. The opening of account and transfer instructions are carried out by the agents of the depository, called Depository Participants (DPs).
QWhat is meant by calendar spread?
Calendar spread means risk off-setting positions in contracts expiring on different dates in the same underlying. For example, you take buy position for 20 MT in NCD-FUT-RBRRS4KTM-20-Feb-2006 @ 6550 per quintal and sell position for 10 MT in NCD-FUT-RBRRS4KTM-20-Mar-2006 @ 6850. 10 MT buy position in NCD-FUT-RBRRS4KTM-20-Feb-2006 and 10 MT sell position in NCD-FUT-RBRRS4KTM-20-Mar-2006 forms a spread against each other and hence called spread position. This spread position would be levied spread margin % for margin calculation instead of IM%. In this example, the balance 10 MT buy position in NCD-FUT-RBRRS4KTM-20-Feb-2006 would be non-spread position and would attract initial margin.
QWhat is National Spot Exchange?
National Spot Exchange Ltd or NSEL is a national level, institutionalised, demutualised and transparent electronic spot exchange set up by Financial Technologies India Ltd (FTIL) and National Agricultural Co-operative Marketing Federation of India Ltd (NAFED) to create a deliverybased, pan-India spot market for commodities.
QWhat is the difference between delivery in physical form and delivery in demat form?
In case of physical delivery, a person gets a warehouse receipt in paper form, while in case of delivery in demat form, he gets a credit entry in his demat account.