Frequently Asked Questions s32

Frequently Asked Questions- Gold Harvest Scheme

What is the objective of the scheme?

The scheme enables customers buy gold directly from the Exchange as against from the jewellery shops in the market. The prime advantage is that the investor could lock-up the price to buy the gold by paying small initial margin money and the investor could decide to take delivery of gold as and when full payment is made.

Who can participate in the scheme?

The scheme is primarily useful for individuals as a savings scheme for purchase of 0.995/0.999 Pure 24 Carat Gold with certification of International Standards through commodity futures exchange. Corporates, Partnership Concerns and HUFs are also welcome to participate in this scheme.

How to open an account?

The duly filled in Application form along with the upfront margin money of Rs.15000 to be submitted at the respective branch. At present, there are no charges for opening an account.

How do investors stand to benefit?

 The investor gets pure gold bar of international standard of .999 / .995 purity.  These gold bars are acceptable anywhere in the world.  There is transparency in the purchase of gold at the price determined at all India level through government recognized commodity exchange.  Due to transparency, the clients can avoid situations of either buying tampered gold or paying exorbitant prices unrelated to the prevalent price.  The scheme is designed in a manner that even small investors can purchase significant quantities of gold by paying for it over a period of time.  The scheme benefits the investors by locking-in the price of gold at the prevalent price. The only volatility clients’ would be subjected to are carry over charges during the currency of the contract. . If market fluctuations give a better rate, investors will stand to enjoy the profits without having to lift physical delivery of gold. The facility of keeping gold in demat form will enable investors to get back the VAT charges while selling. . There is no lock-in period for entry / exit. There is no compulsion to take delivery.

When will a position be taken for an investor?

Customers who wish to participate in the scheme would be registered as clients with us both in MCX and NCDEX. Based on instructions from clients, purchase of gold futures contracts will be made. Is there a time frame within which purchase of contract is to be executed?

Purchase of gold should be made at the current market price or at the price prevailing within 15 working days after allotment of client code. If the purchase is not made within 15 days, Apollo Sindhoori will be entitled to effect the purchase on the 16th day at the then prevailing market price. If 16th day happens to be a holiday, the purchase will be made on the next trading day.

In case customers do not intend to purchase as per the agreement, they will have to communicate the same to Apollo Sindhoori. ASCTL will then refund the margin money.

How will contracts be rolled over every month?

All gold contracts purchased are taken in one month expiry contract. As and when the expiry is nearing, there is need for rolling over the contract. Roll over will be done by sale of existing gold futures contract(s) and purchase of near/ far month gold future contract(s), till such time investors wish to take delivery of gold. On a regular basis, the investors can place orders with ASCTL to rollover their outstanding position (sale of existing gold future contract(s) and purchase of near / far month gold future contract(s), till such time they convey their decision to take delivery of gold.

In case they fail to place an express order the letter of authorization signed by them at the time of opening the account shall be construed as on order on behalf of the investors to roll over the outstanding position with the view to take delivery of gold at subsequent date.

How will investors be aware that positions have been taken in their account?

A Welcome Letter thanking the investors for participating in the Gold Savings Scheme along with a receipt for Rs.15,000 and Contract Note will be sent. A copy of the Welcome Letter will be forwarded to the respective branch.

How do investors pay additional margins and for how long?

The scheme allows investors to pay additional margin moneys of Rs.3,500 or Rs.5,000 or Rs.10,000 till the value of the gold is paid.

What are the different modes of payment under the scheme?

Investors can either issue Post-dated cheques (PDCs) or opt for Electronic Clearing System (ECS) for payment of additional margin moneys at the time of account opening. Investors should clearly mention their client code and name on the reverse side of the PDCs. It is to be noted that investors can issue PDCs only at non-ECS locations and not otherwise. What are the charges applicable to the investors?

The company at its discretion may charge the following to the clients o Initial Brokerage of 2% on purchase of Gold futures contract(s) o Brokerage of 0.125% (each side) on rollover of Gold futures contract(s) o Delivery brokerage of 1% o Value Added Tax 1% at the time of lifting delivery. o Post delivery charges for demat delivery will be as levied by the depository participants and warehouse. At present, the warehouse charges are Re.1 per day for every 100 grams of gold. o Any other taxes, levies that may be applicable on the transactions from time to time as intimated by the Exchange or other Regulatory/ Statutory Authorities.

What happens in the event of surplus/ deficit amount in the account of the customer?

Any surplus/ deficit shall be given/ settled at the time of delivery or at the time of settlement of contract, whichever is earlier.

Can investors close position prematurely?

Investors can square up the contracts at any time and the amount lying in their account will be refunded. Squaring up of contracts may be done by communicating their intention directly or through their concerned branch.

Immediately on such closure, Cheque/ DD for the credit available and Statement of Accounts will be sent along with a cover letter.

Can positions be closed by Apollo Sindhoori without the consent of the investors?

Apollo Sindhoori at its absolute discretion, has the right to close the gold futures position of investors for non-payment of any of the margins, additional margins, taxes, charges and other levies. All losses and financial charges on account of such closing out will have to be borne by the investors.

In the event of two consecutive cheque bounce of additional margin money, Apollo Sindhoori will close all outstanding positions and transfer the credit, if any available, ofcourse after deduction of cheque bounce charges as levied by banks and also after deduction of the necessary charges by ASCTL.

Is it possible to close an existing position and open a fresh one without actually exiting from the scheme? Investors can temporarily close their positions if they so desire. In that case the contracts will be closed. Fresh positions can be taken by the customer when they feel comfortable to take the position.

Are there any restrictions on customers regarding the number of lots they could purchase?

NO. There are absolutely no restrictions on the number of lots. Customers are free to purchase any number of lots under the scheme. Every time a customer wishes to make a purchase, they will have to submit the Gold Information Sheet and the ECS Mandate form duly filled and signed by him.

What happens after payment of final installment?

Investors can either exit from the scheme or take delivery of gold.

In case of delivery of gold, investors can take delivery in demat or physical form. Demat accounts are opened free of cost. However investors will have to bear warehouse charges as levied by Depository from time to time, which is at present 0.28 of the value of the gold.

What are the risk factors clients are subject to under this scheme?

 The client would be subjected to standard risks of trading in the commodities market. These risks are detailed in the Risk Disclosure Agreement enclosed in the Know Your Client Form.  Scheme specific risk factors o As the futures contracts are rolled over, the carry over charges would fluctuate, that may impact the final price at which the delivery is effected. o In such a scenario, the carry over charges may be more than anticipated due to volatility in prices.

What is the procedure for nomination?

In the event of death of the investor, Apollo Sindhoori may with the approval of the Exchange, close out the open gold future contract (s) and close the trading account. The legal representative(s) of the deceased investor shall be liable for any losses, costs, damages including statutory / regulatory charges, if any and shall also be entitled to any surplus which may result there from.

If you are interested please contact:

Nilesh Panchal [email protected]