Attention of the stock brokers is drawn to SEBI master circular no. CDMRD/DMP/CIR/P/2018/126 no. dated September 7, 2018 regarding “Master Circular for Commodity Derivatives Market”.
Stock brokers are advised to ensure following compliance requirements.
1. Registration of client codes
Stock brokers are advised to upload all the client codes well in advance for execution of trade in the Commodity Derivatives segment. Trades will be allowed to be executed only in the registered client codes in the Commodity Derivatives segment. No trades would get executed in the unregistered client code in Commodity Derivatives segment.
With the introduction of Commodity Derivatives segment, an additional segment has been added in the existing file format for uploading UCC. Please refer Exchange notice no. 20180911-12 dated September 11, 2018 in this regard. The updated batch upload file format is attached herewith as Annexure-1.
In order to facilitate the stock brokers who have not taken the membership of Commodity Segment the Exchange has provided the facility to upload UCC in existing file format. The stock brokers who have taken membership for Commodity segment are required to use the new file format for uploading the UCC.
Stock brokers are requested to note that the new file format changes and bulk upload facility would be made live w.e.f September 27, 2018.
2. PAN mismatch file:
The UCC details (PAN and name) uploaded by the stock brokers are verified with the details on the Income Tax database. Post verification, the stock Exchange is providing the PAN mismatch file to the stock brokers containing the details of client codes wherein the details filled by you in the UCC database does not match with the details available on the Income Tax website. The said PAN mismatch file would contain all the records irrespective of segments, wherein the details (either PAN or name or both) are not as per the Income Tax website and require rectification at your end. Stock brokers are advised to check the PAN mismatch file on a daily basis. The records if any, available in the mismatch file should be rectified immediately as per the details available on the Income Tax website.
3. Client code modification:
The provision to modify the client codes for the trades in the Commodity segment shall be available to the stock brokers in RTRMS to rectify genuine errors. As per the provisions under clause 2.6 of SEBI master circular no. CDMRD/DMP/CIR/P/2018/126 dated September 7, 2018
1. Modifications of client codes of non-institutional trades would be allowed only to rectify a genuine error in entry of client code at the time of placing/ modifying the related order.
2. Following shall be classified as genuine errors:
a. Error due to communication and / or punching or typing such that the original client code / name and the modified client code / name are similar to each other
b. Modification within relatives (‘Relative’ for this purpose would mean as defined under Companies Act, 2013)
3. Error Account
a. Shifting of trades to the ‘Error account’ of broker would not be treated as modification of client code, provided that trades in ‘Error account’ are subsequently liquidated in the market and not shifted to some other code.
b. Further, broker shall disclose the codes of accounts which are classified as ‘Error accounts’ to the Exchanges. Each broker should have a well-documented error policy approved by the management of the broker.
4. Exchange shall levy the below penalty on the trading members w.r.t. client code modifications done in Commodity segment to client codes other than Error account
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‘a’ as % of ‘b’
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Penalty as % of ‘a’
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≤ 5
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1
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> 5
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2
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Where
a = Value (turnover) of non-institutional trades where client codes have been modified by a trading member in a segment during a month.
b = Value (turnover) of non-institutional trades of the trading member in the segment during the month
4. Registration of location id’s.
Stock brokers must ensure to register the trading terminals used for trading in commodity Derivatives as per notice no. 20120816-19 dated August 16, 2012.
In case of non-registration of the terminal location details to the Exchange before placing the orders, penalty will be levied by Exchange as per notice no.: 20070517 - 22 dated May 17, 2007.
Further, please refer Exchange notice no. 20120823-13 dated August 23, 2012 according to which 4 provisional files were being downloaded to stock brokers. With the commencement of commodity derivatives w.e.f October 1, 2018, 6 provisional files will be downloaded to stock brokers in the extranet.
The timing for the download of UNLC file is given below:
UNLC1 : 11:30am (orders upto 11:00 am)
UNLC2 : 13:30pm (orders upto 01:00 pm)
UNLC3 : 15:30pm (orders upto 03:00 pm)
UNLC4 : 17:30pm (orders upto 05:00 pm)
UNLC5 : 20:30pm (orders upto 08:00 pm)
UNLC6 : 00:20am (orders upto 23:59 pm)
Further the LC file will be downloaded to the stock brokers on next trading day. Records appearing in LC file are subject to penalty as per Exchange notice no. 20070517 - 22 dated May 17, 2007
The name and path of the UNLC files downloaded to stock brokers are as below:
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SL.NO.
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FILENAME
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EXTRANET PATH
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1
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UNLC<1/2/3/4/5/6>_EQ_DDMMYY
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/EQ/TRANSACTION/MMM-YYYY/DD-MM-YYYY
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2
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UNLC<1/2/3/4/5/6>_FNO_DDMMYY
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/FNO/TRANSACTION/MMM-YYY/DD-MM-YYYY
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3
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UNLC<1/2/3/4/5/6>_CDX_DDMMYY
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/CURRENCY/TRANSACTION/MMM-YYY/DD-MM-YYYY
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4
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UNLC<1/2/3/4/5/6>_BCX_DDMMYY
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/BCX/TRANSACTION/MMM-YYY/DD-MM-YYYY
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5. High Order to Trade ratio in Algorithmic Trading in Commodity Derivatives Segment
Please refer SEBI circular no. SEBI/HO/CDMRD/DMP/CIR/P/2016/97 September 27, 2016 on “Broad Guidelines on Algorithmic Trading for National Commodity Derivatives Exchanges” and SEBI master circular no. CDMRD/DMP/CIR/P/2018/126 no. dated September 7, 2018 regarding “Master Circular for Commodity Derivatives Market”.
Economic disincentive for high daily order-to-trade ratio: As per the direction of SEBI, in case of a high daily order to trade ratio through algorithmic trading in commodity derivatives Segment, following charges shall be levied for algorithmic orders having high order to trade ratio with effect from October 1, 2018. The said charges, computed daily, shall be collected on a monthly basis, after reckoning all algorithmic orders and trades pertaining to all user ids of the member:
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Daily Order to Trade Ratio
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Charges per order
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Less than 50
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Nil
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50 to less than 250 (on incremental basis)
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1 paise
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250 to less than 500 (on incremental basis)
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5 paise
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500 or more than 500 (on incremental basis)*
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5 paise
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* In case the ratio is 500 or more than 500 during a trading day, the concerned member shall not be permitted to place any orders in the commodity derivatives segment of BSE for the first 15 minutes on the next trading day (in the continuous trading session) as a cooling off action. However, the trading member shall be permitted to enter transactions in risk reducing mode in the commodity derivatives segment during such a cooling off period.
For the purpose of calculation of daily Order-to-trade ratio, all algorithmic orders, i.e. order entry, order modifications and order cancellation shall be considered. Further, it may be noted that:
1. The algorithmic orders entered and /or modified within 1 % of the last traded price (LTP) of the respective contract shall not be included in the calculation of the Order –to-Trade ratio for the purpose of arriving at the penalty for higher order – to – trade ratio.
2. The penalty structure will be applicable for only those members who have placed 10,000 orders or more in a day.
Stock brokers may please note that an hourly alert on algo order to trade ratio in commodity derivatives segment will be reflected in the E boss system w.e.f October 1, 2018.
Alerts & Events à Member Surveillance Alerts à Exchange à Commodity à ALGO ORDER TRADE RATIO
Further an hourly, daily and monthly file of high Order to Trade ratio in Algorithmic Trading in Commodity Derivatives will be available to stock brokers through extranet. Path and name of files are as given below:
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Path
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/BCX/TRANSACTION/MMM-YYYY/DD-MM-YYYY/
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Hourly File
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BCX_HA_H<HH>_DDMMYYYY.XXXX (where XXXX is member code, <HH> is 11,12,13 etc)
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End of Day (EOD) File
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BCX_HA_DDMMYYYY.XXXX (where XXXX is member code)
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Monthly file
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BCX _HA_M_MMYY.XXXX(where XXXX is member code)
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File Header(Pipe separated)
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DATE|MEMBERCODE|MEMBERNAME|ALGO ORDER COUNT|ALGO TRADE COUNT|OTR
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Sample Record
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yyyy-mm-dd|Clg no.|Name of member|0|0|0
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For and on behalf of BSE Ltd.
Gopalkrishnan Iyer Hitasha Gurbani
Chief General Manager Asst. General Manager
Broker Supervision Broker Supervision