Contents 1 MEMBERSHIP ...... 1 Membership Categories ...... 1 Eligibility Criteria ...... 1 Fees, Deposits & Net worth Requirements ...... 1 Membership Forms ...... 1 Fixed Deposit Receipts (FDRs) towards Base Minimum Capital ...... 2 Nature of clients ...... 2 NISM certification for approved users and sales personnel ...... 3 Online Registration Mechanism for Securities Market ...... 3 Code of advertisement for stock brokers ...... 3 Segregated Nominee Account Structure ...... 3 2 PRODUCTS ...... 5 3 MARKET OPERATIONS ...... 6 Trading Hours ...... 6 Trading Holidays ...... 6 Liquidity Enhancement Scheme (LES) ...... 6 3.3.1 Framework for Conflict of Interest under Liquidity Enhancement Scheme (LES) ...... 7 3.3.2 Submission of Incentive Claims under Liquidity Enhancement Scheme (LES) ...... 7 Transaction Charges ...... 7 Calendar Spread Functionality ...... 7 Activation/De-activation of Trading User Ids ...... 7 3.6.1 Proprietary Trading ...... 7 3.6.2 Algorithmic trading ...... 8 New Trading Applications and Facilities ...... 8 3.7.1 INX EBOSS Application for Members ...... 8 3.7.2 API Updates ...... 8 3.7.3 Market Data ...... 8 3.7.4 SFTP (Secured File Transfer Protocol) service for Members ...... 9 3.7.5 Customer Relationship System (CRS) application for Members ...... 9 3.7.6 Global Securities Market - Green Debt Reporting Platform ...... 9 Mock Trading Schedule ...... 9 Test Environment ...... 10 List of Files and formats ...... 10 Reference Circulars ...... 10
Issuance, listing and trading of debt securities in IFSC ...... 10 Server Non-Usage Charges ...... 10 Methodology for computation of Daily Settlement Price...... 10 4 REGULATORY & COMPLIANCE ...... 11 Price Bands ...... 11 Position Limits ...... 11 4.2.1 Trading Member-wide Position Limit ...... 11 4.2.2 Client-wide Position Limit ...... 13 4.2.3 Monitoring of Positions based on Unique Client Codes ...... 14 4.2.4 Penalty for Position limit violation ...... 15 4.2.5 Clubbing of open positions ...... 15 Market Parameters ...... 16 4.3.1 Dynamic Price Bands Relaxation ...... 16 4.3.2 PAN-based Self-trade Prevention Check ...... 16 4.3.3 Price Reasonability Check for Derivatives Segment ...... 16 4.3.4 Policy for Annulment of trades undertaken on India INX Trading platform ...... 16 Regulatory Disclosures ...... 17 4.4.1 Participant-wide Trading Volume/Open Interest Data ...... 17 Registration of terminals and location code details ...... 17 Reporting for Artificial Intelligence (AI) and Machine Learning (ML) applications and systems offered and used by market intermediaries ...... 17 Quarterly submission of Cyber Security & Cyber Resilience Framework ...... 17 FAQ for the guidance of entities in IFSC ...... 18 Participation of Non – Resident Individuals in trading of derivatives contracts and debt instruments available at the India International Exchange (IFSC) Ltd ...... 18 Framework for issue of Depository Receipts ...... 19 Clarification circulars regarding participation of Eligible Foreign Investors (EFIs) and Foreign Portfolio Investors (FPIs) in IFSC...... 19 4.11.1 Participation of Foreign Portfolio Investors (FPIs) in Commodity Derivatives ...... 19 4.11.2 Clarification on participation of Eligible Foreign Investors (EFIs) in Commodity Derivatives ...... 20 4.11.3 Operational Guidelines for FPIs & DDPs under SEBI (Foreign Portfolio Investors), Regulations 2019 and for Eligible Foreign Investors ...... 20 Operating Guidelines for Alternative Investment Funds (AIF) ...... 20 Unique Client Code ...... 21 Anti-Money Laundering and Combating Financing of Terrorism...... 21 Margin Information Report to Trading Members ...... 22
Reporting of Suspicious Transaction Reports ...... 22 Commodity Hedging...... 23 Cooling off for High Order to Trade Ratio (OTR) in Algorithmic Trading in INDIA INX ...... 23 Rationalization of imposition of fines for false reporting of margins by Trading Members .... 24 Net worth Computation and Submission ...... 24 System Audit reports (SAR) ...... 24 Internal Audit reports (IAR) ...... 25 Audited Annual Accounts & Auditor’s Report ...... 25 Policy of Annual Inspection of Members by Stock Exchanges/Clearing Corporations ...... 25 5 INFORMATION TECHNOLOGY ...... 27 Connectivity ...... 27 5.1.1 Colocation facility: ...... 27 5.1.2 Leased Line ...... 29 5.1.3 Internet ...... 30 Application Parameters ...... 31 5.2.1 Boltplus Configuration Parameters (Production, Disaster Recovery, Simulation) ... 31 5.2.2 Other Application Connection Details ...... 33 System requirement for trading application ...... 35
1 MEMBERSHIP
Exchange Members are the interface between the Exchange and its users. Members must meet requirements specified by Regulator and comply with a comprehensive set of regulatory requirements specified in the India INX By-Laws. Members are required to have an in-principal approval from the SEBI. Following admission to Exchange, the Exchange submits the necessary documents to the SEBI on the applicant’s behalf. Upon registration with SEBI and commencement of business operations, Members are required to meet various regulatory requirements on an ongoing basis.
Membership Categories
The various membership categories on the Exchange are:
Trading Member This category of membership entitles a Member to execute trades on his own account as well as on account of his clients but, clearing and settlement of trades executed through the Trading Member would have to be done through a Clearing Member. Trading Cum Self Clearing Member This category of membership entitles a Member to execute (TSM) trades and to clear and settle the trades executed on his own account as well as on account of his clients. Trading Cum Clearing Member This category of membership entitles a Member to execute (TCM) trades on his own account as well as on account of his clients and to clear and settle trades executed by themselves as well as by other trading members who choose to use clearing services of the Member. Professional Clearing Member A Member only clears and settles trades of Trading Members (PCM) of the Exchange who choose to clear and settle their trades through the Member.
Eligibility Criteria
As per SEBI circular on IFSC Guidelines dated March 27th, 2015 any recognised entity or entities desirous of operating in IFSC as an intermediary, may form a company to provide such financial services relating to securities market, as permitted by the Board.
Exchange Website link: https://www.indiainx.com/static/eligibilitycriteria.aspx
Fees, Deposits & Net worth Requirements
Details are available in the link given below:
Exchange Website link: https://www.indiainx.com/static/feesdeposits_networth.aspx
Membership Forms
Forms are available in the link given below:
Exchange Website link: https://www.indiainx.com/static/membershipforms.aspx
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Fixed Deposit Receipts (FDRs) towards Base Minimum Capital
Trading Members of the India INX can deposit Base Minimum Capital in the form of Cash/Fixed Deposit Receipts (FDRs)/ Bank Guarantee (BG) in USD.
The FDRs deposited should be issued in favour of “India International Exchange (IFSC) Ltd A/c.
The FDR needs to be deposited along with the letter from concerned bank addressed to India International Exchange (IFSC) Ltd in the below circular.
Trading Members can also renew the FDR by submitting a renewal letter from the concerned bank as per the format prescribed.
Exchange Circular: https://www.indiainx.com/circulars/20170816-1/20170816-1.pdf
Nature of clients
Any intermediary permitted by the Board for operating within the IFSC shall provide financial services to the following categories of clients: i. a person not resident in India; ii. a non-resident Indian; iii. a financial institution resident in India who is eligible under FEMA to invest funds offshore, to the extent of outward investment permitted; iv. a person resident in India who is eligible under FEMA, to invest funds offshore, to the extent allowed under the Liberalized Remittance Scheme of Reserve Bank of India, subject to a minimum investment as specified by the Board from time to time:
Provided that clients referred to in clauses (ii) to (iv) may be provided services, subject to guidelines of Reserve Bank of India.
Any intermediary permitted by the Board for operating within the IFSC shall, for the purpose of enforcing compliance with regulatory requirements, appoint a senior management person as “Designated Officer”.
In order to avail investment advisory or portfolio management services in IFSC, the client shall be:
i. a person resident outside India; ii. a non-resident Indian; iii. a financial institution resident in India who is eligible under FEMA to invest funds offshore, to the extent of outward investment permitted; iv. a person resident in India having a net worth of at least US Dollar one million during the preceding financial year who is eligible under FEMA to invest funds offshore, to the extent allowed in the Liberalized Remittance Scheme of Reserve Bank of India: Provided that clients referred to in clauses (ii) to (iv) may be provided services, subject to guidelines of Reserve Bank of India.
Exchange Circular: https://www.indiainx.com/circulars/20170403-1/20170403-1.pdf
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NISM certification for approved users and sales personnel
Applicants for the Ttrading membership of INDIA INX are required to submit Combined Derivatives Certification (‘Common Derivatives’) conducted by NISM at the time of submission of application for SEBI registration.
For person associated in compliance functions who will be a compliance officer or designated officer in GIFT IFSC Exchanges, NISM has also advised to obtain Securities Intermediaries and Compliance Officer (Series III-A) certification.
For persons associated in operations and risk management functions in GIFT IFSC Exchanges, NISM has also advised to obtain Securities Operations and Risk Management (Series VII) certification.
Exchange Circular: https://www.indiainx.com/circulars/20171219-1/20171219-1.pdf
Online Registration Mechanism for Securities Market
SEBI circular no. SEBI/HO/MIRSD/MIRSD1/CIR/P/2017/38 dated May 2, 2017 has intimated that SEBI’s Intermediary Portal is made operational for Online Registration of Securities Market Intermediaries.
The SEBI Intermediary Portal includes online application for registration, processing of application, grant of final registration, application for surrender / cancellation, submission of periodical reports, requests for change of name/address/ other details, etc.
Members may note that the applications in respect of stock brokers/ sub-broker and depository participants shall continue to be made through the Stock Exchanges and depositories respectively.
Exchange Circular: https://www.indiainx.com/circulars/20170504-2/20170504-2.pdf
Code of advertisement for stock brokers
SEBI has provided the guidelines in respect issuance of advertisement by stock brokers.
i. Stock Broker or its associates/group company cannot directly or indirectly, sponsor or be associated with any schemes/leagues/competition, etc. which may involve distribution of monies/prizes/gifts/medals, etc. ii. No reference to Stock Broker’s name, logo etc. can be made in any Schemes/leagues/competition, etc. iii. Stock Broker cannot share any information of their clients with a third party, even with the clients’ consent, in case any third party is involved in launching schemes/leagues/competition, etc. iv. Stock Broker cannot take any financial liability, including any contingent financial liability, on account of any schemes/leagues/competitions, etc. launched by a third party.
Exchange Circular: https://www.indiainx.com/circulars/20171013-1/20171013-1.pdf Segregated Nominee Account Structure
Segregated Nominee Account Structure permits the orders of foreign investors to be routed through eligible segregated nominee account providers (Providers), for trading on the Stock Exchanges in the IFSC. In order to further facilitate ease of market access for foreign investors, SEBI has issued a circular (SEBI/HO/MRD/DRMNP/CIR/P/2018/83) on 24 May, 2018 that permits segregated nominee account structure (SNAS) in the IFSC. While adhering to regulatory requirements at the client level, India INX has issued guidelines for Segregated Nominee Account Structure in below mentioned circular. 3
Eligibility Criteria for Providers:
a) Entities eligible to become Provider: Following entities are eligible to provide Segregated Nominee Account Structure services by registering with the Exchange as a Provider:
i. SEBI-registered brokers in the International Financial Services Centre (IFSC) at the Gujarat International Finance-Tec (GIFT) City ii. SEBI registered Foreign Portfolio Investors (FPIs) under Category I and II as per the SEBI (FPI) Regulations, 2014 and amendments thereafter iii. Trading / Clearing Members of International Stock Exchanges / Clearing Corporations that are regulated by a Member of Financial Action Task Force (FATF). Such entities shall be eligible to register as a Provider subject to successful completion of a due diligence / KYC verification and validation performed by a SEBI registered intermediary operating in the IFSC or by a bank which is permitted by RBI to operate in IFSC, as per the SEBI circular no. IMD/HO/FPIC/CIR/P/2017/003 dated Jan 04, 2017 and SEBI circular no. SEBI/HO/CIR/P/2017/79 dated July 11, 2017 and any amendments thereafter, or any other entity as specified by the Exchange.
b) Minimum net-worth requirement: Entities applying to register as a Provider should have a minimum net worth of 10 crore. The applicant should submit a Net-worth Certificate duly certified by a Chartered Accountant or Certified Public Accountant (or equivalent) or a Company Secretary in their home jurisdiction or in India along with their application.
Procedure for registration of eligible entities as Provider with the Exchange
a) Eligible entities (the “Applicant”) that would like to register with the Exchange as Providers shall submit the duly completed Application Form and supporting documents as mentioned in Annexure 1 enclosed along with this circular. The Exchange reserves the right to request for further information regarding the Applicant as applicable for the purpose of KYC / AML due diligence.
b) After successful completion of due diligence of the Applicant, the Exchange shall assign a unique identifier called the Provider Code or PCODE to the Applicant who shall act as a Segregated Nominee Account Provider.
Provider opens Trading Account(s) with Trading Member(s) a) After the Provider receives the PCODE from the Exchange, the Provider registered can register with one or more Trading Members for opening Trading Account(s). b) Providers can open Trading Accounts with multiple Trading Members in which case they would be required.
On-boarding of Client by Provider a) Only foreign clients can be on-boarded by the Providers. b) Each end-client shall open a Segregated Nominee Account with only one Provider and shall be assigned a Unique Client Identifier called the CLCODE in accordance with procedures published by the India International Clearing Corporation (IFSC) Limited (“India ICC”). c) The Exchange shall collect the Segregated Nominee Account related end-client information along with the CLCODE from the Clearing Corporation.
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d) The details of the end-client shall be disclosed to the Exchange / Clearing Corporation and may not be disclosed to Trading / Clearing Members. However, the Provider shall disclose such information to SEBI, if required by SEBI in compliance in terms of Paragraph 3 of the above-mentioned SEBI circular.
Exchange Circular: https://www.indiainx.com/circulars/20180611-1/20180611-1.pdf
https://www.indiainx.com/circulars/20191023-1/20191023-1.pdf
2 PRODUCTS
Exchange offers derivatives trading in various asset classes viz Index, Commodity, Single Stocks and Currency as given below:
Index Equity Commodity Currency Debt Derivatives Derivatives Derivatives Derivatives Precious Metals Foreign Currency Bond Sensex Indian Single Global Currency Base Metals Masala Bonds India 50 Stock Derivatives Derivatives Energy Sustainable Bonds
Details of products available for trading is given in link below:
INDIA INX Circular: https://www.indiainx.com/static/productsnapshot.aspx
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3 MARKET OPERATIONS
Trading Hours
The trading in India INX shall be conducted over a period of 22 hours. The trading shall commence early morning at 04:30:00 hrs. Indian Standard Time (IST) and shall continue late till 02:30:00 hrs. (IST) of the next day. Thus, the trading shall span across two calendar days and one such end to end trading cycle shall be designated as one single business day. Further, trading in each business day shall be divided in two trading sessions.
The below table provides an illustration of the trading timings and the business day concept:
Trading Calendar Date Time (IST) Business Date Session Start End Start End Session 1 January 01, 2020 January 01, 2020 04:30:00 hrs. 17:00:00 hrs. January 01, 2020 Session 2 January 01, 2020 January 02, 2020 17:00:01 hrs. 02:30:00 hrs.
• As mentioned in the above table, the trading for ‘Business Date’ of January 01, 2020 shall be conducted over 2 trading sessions. & span across two calendar days viz. January 01, 2020 and January 02, 2020. • The first trading session shall start at 04:30:00 hrs. in the morning and shall end at 17:00:00 hrs. in the evening of January 01, 2020. • The second session shall start at 17:00:01 hrs. in the evening of January 01, 2020 and end at 02:30:00 hrs. of January 02, 2020. • The ‘Business Date’ shall be provided to the Members through the file name of the contract master file.
Trading Holidays
The following days are notified as trading holidays for the calendar year 2020:
Sr. No Date Day Holiday Name 1 April 10, 2020 Friday Good Friday 2 October 2, 2020 Friday Mahatma Gandhi Jayanti 3 December 25, 2020 Friday Christmas
The Exchange may alter / change the holidays, for which a separate circular shall be issued in advance.
Liquidity Enhancement Scheme (LES)
The Exchange has introduced LES in the following products.
▪ INDIA50 Futures ▪ INDIA50 Options ▪ GOLD Futures
For details, kindly refer to the circular issued by the Exchange as per link given https://www.indiainx.com/circulars/20181224-1/20181224-1.pdf
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3.3.1 Framework for Conflict of Interest under Liquidity Enhancement Scheme (LES)
In pursuance of para 7.2 of SEBI circular no. CIR/MRD/DP/14/2014 dated April 23, 2014 and exchange circular no. 20190528-1 dated May 28, 2019
Exchange Circular: Framework for Conflict of Interest under LES
3.3.2 Submission of Incentive Claims under Liquidity Enhancement Scheme (LES)
Vide circular no. 20171017-1 date October 17, 2017 LES was launched and the same has been extended/ amended from time to time.
Invoice for eligible LES incentive should be submitted to the Exchange within a period of six months from the end of month in which it is generated by participating Members.
Exchange Circular: https://www.indiainx.com/circulars/20191209-1/20191209-1.pdf
Transaction Charges
No Transaction charges shall be applicable till further notice.
Calendar Spread Functionality
Calendar Spread - This facility shall help in creating simultaneously two positions viz. one shall be in near month futures instrument and 2nd shall be in the far month futures instrument of same underlying.
The trading convention of Futures Calendar Spread orders in India INX segment is as follows: a. A Buy spread means, Buy in Near Month leg and Sell in Far Month leg. b. A Sell spread order means, Sell in Near Month leg and buy in Far Month leg.
Activation/De-activation of Trading User Ids
3.6.1 Proprietary Trading
As directed by SEBI, it is hereby notified that Trading Members are required to specify the nature of the order in terms of the order being placed is a Client order or it is on their OWN account at the time of order entry on the trading system.
In accordance with SEBI circular no. SEBI/MRD/SE/Cir-32/2003/27/08 dated August 27, 2003, Exchange is providing the facility of placing of orders on ‘proprietary account' through trading terminals.
Accordingly, it has been decided that:
• Facility of placing orders on own account through trading terminals is extended only at one location of the Members as specified / required by the Members.
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• Trading terminals located at places other than the location specified shall have a facility to place orders only for and on behalf of a client by entering client code details as required / specified by the Exchange / SEBI.
• In case any Member requires the facility of using own account through trading terminals from more than one location within IFSC, such Member shall be required to submit an undertaking to the stock exchange stating the reason for using the own account at multiple locations within IFSC and the Exchange may, on case to case basis after due diligence, consider extending the facility of allowing use of own account from more than one location within IFSC.
3.6.2 Algorithmic trading
Exchange supports automated trading vide various SEBI and Exchange circulars. Details of forms to be submitted are given for Algorithmic trading in the link below: https://www.indiainx.com/static/trading_operations.aspx
Based on SEBI guidelines vide circular SEBI/HO/MRD/DP/CIR/P/2018/62 dated April 09, 2018, Algo ID must be tagged with every algorithm order as a unique identifier for each approved algorithm. For details, kindly refer to the circular issued by the Exchange as per link given https://www.indiainx.com/circulars/20190905-2/20190905-2.pdf https://www.indiainx.com/circulars/20190827-2/20190827-2.pdf
New Trading Applications and Facilities 3.7.1 INX EBOSS Application for Members
Trading Members of the Exchange are hereby informed that Exchange is extending electronic based online Surveillance System application (EBOSS) to Member level. Members will be able to access the application via internet and view various reports and near real time alerts generated by the application.
Exchange Circular: 20190604-2. 3.7.2 API Updates
Trading Members and vendors using ETI APIs for connecting their trading application refer the circular no. 20190515-1 issued on May 15,2019 as per link given below: https://www.indiainx.com/circulars/20190515-1/20190515-1.pdf
3.7.3 Market Data
Exchange disseminates market data broadcast through various types of streams in to its ETIAPI users- • EOBI (Enhanced Order Book Interface) • EMDI (Enhanced Market Data Interface) • MDI (Market Data Interface) • NFCAST
Circular for Market data was issued on 1st July 2017, can be referred in link http://www.indiainx.com/circulars/20170701-1/20170701-1.pdf
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3.7.4 SFTP (Secured File Transfer Protocol) service for Members
Exchange introduced a web based SFTP (Secured File Transfer Protocol) services for secured transfer of files in addition to existing Extranet Portal facility. For details, kindly refer to the circular issued by the Exchange as per link given https://www.indiainx.com/circulars/20190814-1/20190814-1.pdf
3.7.5 Customer Relationship System (CRS) application for Members
Exchange introduced ‘Customer Relationship System (CRS) application for Members through which Members can directly escalate all type of complaints to any department and real time tracking of all their escalated complaints. For details, kindly refer to the circular issued by the Exchange as per link given https://www.indiainx.com/circulars/20190614-1/20190614-1.pdf
3.7.6 Global Securities Market - Green Debt Reporting Platform
Exchange is introducing a new platform named “GSM-Green” to report trades in Green Debt Products. kindly refer to the circular issued by the Exchange as per link given https://www.indiainx.com/circulars/20190612-1/20190612-1.pdf
Mock Trading Schedule
Mock trading is conducted regularly by the Exchange on first Saturday of every month to test its trading systems and for Members to chart out their own testing schedule in line with the mock trading schedule. Mock trade timings and changes to the schedule, if any will be informed to the Members through separate notice. Members are requested to ensure active participation in the mock.
The mock trading schedule is given as below.
Sr. No. Dates of Mock Trading 1 February 08, 2020 2 March 07, 2020 3 April 04, 2020 4 May 09, 2020 5 June 06, 2020 6 July 04, 2020 7 August 08, 2020 8 September 05, 2020 9 October 10, 2020 10 November 07, 2020 11 December 05, 2020
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Test Environment
Kindly refer below link for test environment setup of the Exchange. http://www.indiainx.com/nta.aspx
Kindly refer below link for forms & formats related to Test Environment Application Access. https://www.indiainx.com/static/trading_operations.aspx
List of Files and formats
Details of back office files and formats are available in the links provided below:
• Back office file format • Daily Market Consolidated Data Reference Circulars
List of circulars consolidate in the Master Circular
Date Circular No. Subject February 13, 2019 20190213-2 Master Circular - 2019 January 19,2018 20180119-1 Master Circular - 2018
Issuance, listing and trading of debt securities in IFSC
SEBI has allowed issuance, listing and trading of debt securities on Exchanges in International Financial Services Centres (IFSC) vide circular no. SEBI/HO/MRD/DRMNP/CIR/P/2017/96 dated August 31, 2017. For detailed framework and guidelines on Issuance, listing and trading of debt securities refer India INX Circular on Framework for Listing of Debt Securities on Global Securities Market (GSM) and Global Securities Market – Debt Trading Platform.
Server Non-Usage Charges
In continuation to circular no. 20180725-1 dated July 25, 2018, Members are requested to note that the Exchange shall levy server non-usage charges of USD 350 p.m. w.e.f. April 01, 2019
Non-utilization charges for a month will be computed and levied within 7 working days of the next month.
Exchange Circular: Server Non-Usage Charges
Methodology for computation of Daily Settlement Price
Kindly refer India INX Circular for detail methodology for computation of daily settlement price https://www.indiainx.com/circulars/20190607-2/20190607-2.pdf
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4 REGULATORY & COMPLIANCE
Price Bands
There are no daily minimum/maximum price ranges mandated by regulation and applicable in the derivatives segment. However, in order to prevent erroneous order entry, operating ranges and daily minimum/maximum ranges are maintained as per below appended circulars (hyperlinks) for different derivative products.
• For Index Futures: at 10% of the base price (refer SEBI Circular link below for details) • For Futures on Individual Securities: at 10% of the base price (refer SEBI Circular link below for details) • For Commodity Futures: As per contract specifications for various commodities in INDIA INX Circular No. 20170412-1 & 20171010-2 (also refer SEBI circular link below for details) • For Currency Futures: As per contract specifications for various currencies in INDIA INX Circular 20170531-2 • For all Options Contracts: The Exchange has a contract specific price band based on the delta of the options contract using underlying previous close price and volatility in Currency Derivative Segment. Intra-day relaxation of the price band is based on the market trend.
SEBI Circulars: SEBI/HO/MRD/DP/CIR/P/2016/135 dated December 16, 2016, CDMRD/DMP/CIR/P/2018/126 dated September 07, 2018 & CIR/MRD/DP/34/2012 dated December 13, 2012. Position Limits
As per SEBI Circular No. SEBI/HO/MRD/DRMNP/CIR/P/2017/31, The Market Wide Position Limit (MWPL) for ‘derivatives on equity shares’ shall be equal to ten percent of the number of shares held by non-promoters in the relevant underlying security (i.e. free-float holding). Further, the MWPL for ‘derivatives on equity shares’ in recognized Stock Exchanges in IFSC shall be reckoned separately from that in recognized Stock Exchanges in domestic market and the MWPL (in value terms), in no circumstances, shall exceed the fifty percent of the MWPL (in value terms) in recognized Stock Exchanges in domestic market.
The Exchange shall specify the market wide position limits on the last trading day of the month which shall be reckoned for this purpose during the next month.
There is no Market Wide Position Limits specified for Index Derivatives, Commodity Derivatives & Currency Derivatives Contracts.
4.2.1 Trading Member-wide Position Limit
Index Futures / Options:
The Trading Member position limits in index futures/options contracts shall not exceed 5000000 contracts. This limit would be applicable on open positions in all futures/ Options contracts on a particular underlying index.
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Single Stock Future/Options:
Position limit on Futures /Options contracts on single stocks is related to the market-wide position limit for the individual stocks. The combined Futures /Options position limit shall be 10% of the applicable Market Wide Position Limit (MWPL). SEBI Circular ref no: SEBI/HO/MRD/DRMNP/CIR/P/2017/31
Currency Futures / Options:
Gross open position across all contracts not to exceed 15% of the total open interest or USD 1 billion equivalent, whichever is higher. SEBI Circular ref no : SEBI/HO/MRD/DRMNP/CIR/P/2017/43
Commodity Futures/Options:
Product Trading Members
Gross open position across all contracts shall not exceed 30% of the total open interest GOLD & GOLD KG or 5 lakhs contracts whichever is higher. Gross open position across all contracts shall not exceed 30% of the total open interest or Silver 3.30 lakhs contracts whichever is higher.
Gross open position across all contracts shall not exceed 30% of the total open interest Brent Crude Oil or 4 lakhs contracts whichever is higher Gross open position across all contracts shall not exceed 30% of the total open interest Copper or 7 lakhs contracts whichever is higher. Gross open position across all contracts shall not exceed 30% of the total open interest ALUMINUM or 5 lakhs contracts whichever is higher. Gross open position across all contracts shall not exceed 30% of the total open interest LEAD or 1.40 lakhs contracts whichever is higher.
Gross open position across all contracts shall not exceed 30% of the total open interest NICKEL or 4 lakhs contracts whichever is higher.
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Gross open position across all contracts shall not exceed 30% of the total open interest ZINC or 1.40 lakhs contracts whichever is higher.
Exchange Circulars weblinks –
Combined Position Limits for GOLD, Silver & Copper (Contract specification) Combined Position Limits for WTI Crude Oil & Brent Crude Oil Position Limits for Aluminium, Lead, Nickel and Zinc futures contracts 4.2.2 Client-wide Position Limit
Index Futures / Options:
Client-wide position limits in index Futures/Options contracts shall not exceed 3000000 contracts. This limit would be applicable on open positions in all Futures/Options contracts on a particular underlying index.
Single Stock Future/Options:
The gross open position across all Futures /Options contracts on a particular underlying security, of each specific client should not exceed the higher of: 1% of the free float market capitalization (in terms of number of shares) Or 5% of the open interest in all derivative contracts in the same underlying stock (in terms of number of shares) whichever is higher SEBI Circular ref no: SMDRP/DC/CIR-10/01
Currency Futures / Options:
Gross open position across all contracts not to exceed 6% of the total open interest or USD 100 million equivalent, whichever is higher. SEBI Circular ref no: SEBI/HO/MRD/DRMNP/CIR/P/2017/43
Commodity Futures/Options:
Product Client
Gross open position across all contracts shall not exceed 10% of the total open interest GOLD or 50000 contracts whichever is higher. Gross open position across all contracts shall not exceed 10% of the total open interest Silver or 33000 contracts whichever is higher.
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Gross open position across all contracts shall not exceed 10% of the total open interest Brent Crude Oil or 40000 contracts whichever is higher. Gross open position across all contracts shall not exceed 10% of the total open interest Copper or 70000 contracts whichever is higher. Gross open position across all contracts shall not exceed 10% of the total open interest ALUMINUM or 50,000/- contracts whichever is higher.
Gross open position across all contracts shall not exceed 10% of the total open interest LEAD or 14000 contracts whichever is higher. Gross open position across all contracts shall not exceed 30% of the total open interest NICKEL or 40000 contracts whichever is higher. Gross open position across all contracts shall not exceed 30% of the total open interest ZINC or 14000 contracts whichever is higher.
Exchange Circular Weblinks–
Combined Position Limits for GOLD, Silver & Copper (Contract specification) Combined Position Limits for WTI Crude Oil & Brent Crude Oil Position Limits for Aluminium, Lead, Nickel and Zinc futures contracts
4.2.3 Monitoring of Positions based on Unique Client Codes
The client level positions limits shall be monitored at the unique client code level based on the client details uploaded by the Member to the Exchange. The client level position limits shall be applicable on the combined positions for the same clients trading through different Members, as well. In all the above cases, members shall ensure that client-level position limits are kept within the permissible limits. In the event of a violation, the Trading Member/ Clearing Member shall be required to ensure that –
The client does not take fresh positions and
The position of such clients are reduced so as to be within permissible limits. These position limits shall be applicable on the combined position in all futures and options contracts on an underlying security.
Exchange Circular weblink - Unique Client Code 14
4.2.4 Penalty for Position limit violation
Penalty for position limit violation at Trading Member level:
When the open position of any Trading Member, exceeds the specified limit at any time, including during trading hours, it shall be treated as a violation. In case of violation, the Exchange may place them in the Risk Reduction Mode (RRM) mode and shall disallow them from putting any additional orders other than square off orders or withdraw trading facilities of the Trading Member.
Additionally, penalty as mentioned below shall be levied for trading Member position limit violation:
Instances of Position Limit violations in a Penalty (In USD $) calendar month
1st instance 0.07% for an instance
2nd to 5th instance of disablement 0.07% + US $ 10- per instance from 2nd to 5th instance
6th to 15th instance of disablement 0.07% + US$ 40/- (for 2nd to 5th instance) + US $ 20/- per instance from 6th to 15th instance
16th instance onwards 0.07% + US $.240/- (for 2nd to 15th instance) + US $ 40/- per instance from 16th instance onwards.
Penalty for position limit violation at Client level:
When the open position of any client, exceeds the specified limit at the end of the day the same shall be treated as a violation and a penalty of US $ 50/- per violation / per client shall be levied to the Trading Members for every day of violation. The penalty for limit violation shall be levied on a monthly basis based on slabs as mentioned above or such other amount as specified from time to time.
Exchange Circular weblink: Penalty for position limit violation at Trading member level & Client level 4.2.5 Clubbing of open positions
The criteria for clubbing open positions are detailed in SEBI circular SEBI/HO/CDMRD/DMP/CIR/P/2016/96 dated on September 27, 2016.
To calculate open positions for the purpose of position limits, Exchanges shall take suitable measures for clubbing of open positions of Clients/Members who may be acting in concert to circumvent the norms of position limits. The broad guidelines for clubbing of open positions are provided in Annexure- B of the SEBI Circular.
Members are required to take note of the above and put in place adequate processes to ensure that the position limits are also monitored by them considering attached guidelines on clubbing of open positions.
Exchange Circular weblink: Clubbing of open positions 15
Market Parameters 4.3.1 Dynamic Price Bands Relaxation
SEBI Circular ref no. - CIR/MRD/DP/34/2012
The Exchange has implemented appropriate price bands as prescribed by SEBI for scrips on which derivatives products are available or scrips included in indices on which derivatives products are available.
For such scrips, a mechanism of dynamic price bands (commonly known as dummy filters or operating range) which prevents acceptance of orders for execution that are placed beyond the price limits set by the Stock Exchanges has been provided. Such dynamic price bands are relaxed by the Exchange as and when a market-wide trend is observed in either direction.
4.3.2 PAN-based Self-trade Prevention Check
Self-trade prevention check was introduced based on Permanent Account Number (PAN) of clients. Using the PAN details available in the Exchange records, the aforesaid check helps to prevent matching between a buy and a sell order of a client placed by different Members in the same order book.
4.3.3 Price Reasonability Check for Derivatives Segment
Price reasonability check (PRC) functionality was introduced to measure the further strengthen the Exchange’s pre-trade risk management framework. In PRC functionality, each new (incoming) limit order price shall be validated with the Exchange defined Price Reasonability Range (PRR). PRR shall be dynamically computed and applied by the trading system using a real-time reference price. The PRC functionality is applicable for all futures and option contracts. It shall not be applicable for calendar spreads and paired option contracts.
Salient Features of Price Reasonability Check (PRC) functionality: a) It is applicable to incoming limit orders. b) Price of incoming limit orders is checked with respect to PRR prevailing at that point of time. c) PRR is dynamically computed using a real-time reference price. The Reference price shall be based on Best Bid/Offer prices on each contract/security. d) Incoming orders outside of the PRR at that particular time shall be rejected. e) If best bid/offer price is not available then the previous close price is applicable as the reference price. f) Trading system automatically switches, in real-time, between using the best bid/offer price and LTP (or previous close price) as the reference price to compute PRR, depending upon the order book situation.
4.3.4 Policy for Annulment of trades undertaken on India INX Trading platform
The Exchange introduced Policy on Annulment of Trades and defined suitable criteria so as to discourage frivolous trade annulment requests referred to the Exchange by Trading Members. The framework for processing the trade annulment requests from trading Members for trades executed on the Exchange trading platform is provided in the circular as per below link.
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Exchange Circular weblink: Policy for Annulment of Trades
Regulatory Disclosures
The Exchange from time to time disseminates the data pertaining to the trading in the derivative segments for the information of the market. 4.4.1 Participant-wide Trading Volume/Open Interest Data
The data relating to Open Positions number of contracts and Open Position in terms of volume are updated on daily basis at End-of-day. Exchange Web link: https://www.indiainx.com/markets/dailymarketdata.aspx
Registration of terminals and location code details
All Trading Members are required to ensure that the database of all trading terminals are complete and correct and the location details (16 digit location code, mode of connectivity, address of terminal, and user of terminal etc.) of all terminals are registered with the Exchange before placing the orders. Trading terminals / IML terminals allotted and particulars of which are not uploaded/wrongly uploaded as above shall be treated as unregistered terminals.
Exchange Circular: Registration of terminals and location code details
Reporting for Artificial Intelligence (AI) and Machine Learning (ML) applications and systems offered and used by market intermediaries
The SEBI circular no. SEBI/HO/MIRSD/DOS2/CIR/P/2019/10 dated January 4, 2019 and SEBI circular no. SEBI/HO/MRD/DOP1/CIR/P/2019/24 dated January 31, 2019 require that all registered Stock Brokers / Depository Participant offering or using applications or systems as defined in the circular, should participate in the reporting process by completing the AI / ML reporting form.
Accordingly, Members who are offering or using applications or systems as defined in Annexure B of SEBI circular are required to submit the details in AI/ML Reporting Form in the IIeFS within 15 calendar days of the expiry of the quarter. Further Members who are not offering or using the applications or systems as defined in Annexure B are also required to submit the AI/ML Reporting Form by selecting the option as “No” in IIeFS. Members are not required to submit hard copy of the same.
Exchange Circular weblink: 20190213-1. Quarterly submission of Cyber Security & Cyber Resilience Framework
Reference is drawn to Exchange circular no. 20191016-01, 20191016-02 and 20191118-1 dated October 16, 2019 and November 16, 2019 respectively also SEBI Circulars BI/HO/MIRSD/DOP/CIR/P/2019/109 dated October 15, 2019 and SEBI/HO/MIRSD/CIR/PB/2018/147 dated December 03, 2018 regarding prescribed framework for Cyber Security & Cyber Resilience for Stockbrokers.
Paragraph 52 of Annexure 1 of the SEBI circular dated December 03, 2018 specifies the following regarding sharing of information:
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Quarterly reports containing information on cyber-attacks and threats experienced by Stock Brokers / Depository Participants and measures taken to mitigate vulnerabilities, threats and attacks including information on bugs / vulnerabilities / threats that may be useful for other Stock Brokers / Depository Participants should be submitted to Stock Exchanges / Depositories
Hereafter, it is mandatory for stock brokers to share quarterly reports containing information on cyber-attacks and threats experienced by Stock Brokers and measures taken to mitigate vulnerabilities, threats and attacks including information on bugs/vulnerabilities/threats.
Further, the report should be duly signed by the Designated Officer appointed in terms of para 6 of the said SEBI Circular dated December 03, 2018 and shall be submitted through IIeFS portal only.
Further, the Designated Officer on receipt of any information with respect to the unusual activities and events as prescribed in para 8 of the said SEBI Circular dated December 03, 2018 shall inform the Exchange within 24 hours of receipt of such information.
Members are requested to take a note on below INDIA INX Circulars weblinks:
1. Quarterly submission of Cyber Security &Cyber Resilience Framework through IIeFS 2. Cyber Security &Cyber Resilience Framework for Stock Brokers / Depository Participants - Clarifications 3. Submission of Quarterly reports regarding Cyber Security &Cyber Resilience framework for Stock Brokers 4. Subject Cyber Security &Cyber Resilience framework for Stock Brokers
FAQ for the guidance of entities in IFSC
All Members are requested to note Frequently Asked Questions (FAQ), compiled by the Gujarat International Finance Tech-City (GIFT City) for the guidance of entities in the International Financial Services Centre (IFSC).
Exchange Circular weblink: FAQ for the guidance of entities in IFSC
Participation of Non – Resident Individuals in trading of derivatives contracts and debt instruments available at the India International Exchange (IFSC) Ltd
Trading Members are requested to refer to SEBI (IFSC) Guidelines, 2015 issued on March 27, 2015 wherein clause (9) on nature of clients clarifies that:
(1) Any intermediary permitted by the Board for operating within the IFSC shall provide financial services to the following categories of clients:
(i) a person not resident in India;
(ii) a non-resident Indian;
(iii) a financial institution resident in India who is eligible under FEMA to invest funds offshore, to the extent of outward investment permitted;
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(iv) a person resident in India who is eligible under FEMA, to invest funds offshore, to the extent allowed under the Liberalized Remittance Scheme of Reserve Bank of India, subject to a minimum investment as specified by the Board from time to time:
Provided that clients referred to in clauses (ii) to (iv) may be provided services, subject to guidelines of Reserve Bank of India.
Exchange Circular: 20190604-1
Framework for issue of Depository Receipts
Members of the Exchange may note that below mentioned circular and notifications issued by Central Government and SEBI regarding Depository Receipts.
1. SEBI has issued circulars no. SEBI/HO/MRD/DOP1/CIR/P/2019/106 dated October 10 and SEBI/HO/MRD2/DCAP/CIR/P/2019/146 dated November 28, 2019 regarding Framework for issue of Depository Receipts. 2. Depository Receipts Scheme, 2014.
3. Central Government Notification dated September 18, 2019.
4. Central Government Notification dated October 7, 2019.
Exchange Circular weblinks. 20191010-02 and 20191205-1
Clarification circulars regarding participation of Eligible Foreign Investors (EFIs) and Foreign Portfolio Investors (FPIs) in IFSC
SEBI (International Financial Services Centre) Guidelines, 2015 read with SEBI circular IMD/HO/FPIC/CIR/P/2017/003 dated January 4, 2017 prescribe that,
“In case of participation of an EFI, not registered with SEBI as an FPI, but desirous of operating in IFSC, a Trading Member of recognized Stock Exchange in IFSC, may rely upon the due diligence carried out by a bank, which is permitted by RBI to operate in IFSC, during the account opening process of EFI.”
Accordingly, KYC uploaded on CKYC by a Bank, permitted by RBI to operate in IFSC and Trading Account opening form/consent for trading in India INX, and may be the base for trading of Eligible Foreign Investor, in INDIA INX.
Also, SEBI circular No. IMD/HO/FPIC/CIR/P/ 2017/003 dated January 04, 2017 prescribes also Guidelines for participation/functioning of Eligible Foreign Investors (EFIs) and FPIs in International Financial Services Centre (IFSC).
Exchange Circulars: Compliance 4.11.1 Participation of Foreign Portfolio Investors (FPIs) in Commodity Derivatives
SEBI has permitted FPIs to participate in commodity derivatives contracts traded in Stock Exchanges in IFSC subject to following conditions prescribed in the SEBI Circular no. SEBI/HO/CDMRD/DMP/CIR/P/2017/106 dated September 26, 2017:-
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• The participation would be limited to the derivatives contracts in non-agricultural commodities only. • Contracts would be cash settled on the settlement price determined on overseas Exchanges. • All the transactions shall be denominated in foreign currency only.
Exchange Circular: Participation of Foreign Portfolio Investors (FPIs) in Commodity Derivatives in IFSC. 4.11.2 Clarification on participation of Eligible Foreign Investors (EFIs) in Commodity Derivatives
Members are requested to note circular no. SEBI/HO/MRD/DRMNP/CIR/P/2019/39 dated March 18, 2019 issued by the Securities Exchange Board of India about clarifications on participation of EFIs in Commodity Derivatives in IFSC.
Kindly refer to SEBI circular IMD/HO/FPIC/CIR/P/ 2017/003 dated January 04, 2017 wherein guidelines for participation/functioning of Eligible Foreign Investors (EFIs) and Foreign Portfolio Investors (FPIs) in International Financial Services Centre (IFSC) have been issued.
In this regard, it is clarified that the EFIs may participate in commodity derivatives contracts traded in Stock Exchanges in IFSC subject to the following conditions:-
• The participation would be limited to the derivatives contracts in non-agricultural commodities only, • Contracts would be cash settled on the settlement price determined on overseas Exchanges, and • All the transactions shall be denominated in foreign currency only.
Exchange Circular: Clarification on participation of Eligible Foreign Investors (EFIs) in Commodity Derivatives in IFSC. 4.11.3 Operational Guidelines for FPIs & DDPs under SEBI (Foreign Portfolio Investors), Regulations 2019 and for Eligible Foreign Investors
All Member may kindly note SEBI Circular No. IMD/FPI&C/CIR/P/2019/124 dated November 05, 2019 on subject Operational Guidelines for FPIs & DDPs under SEBI (Foreign Portfolio Investors), Regulations 2019 and for Eligible Foreign Investors.
SEBI Circular weblink: Operational Guidelines for FPIs & DDPs under SEBI (Foreign Portfolio Investors), Regulations 2019 and for Eligible Foreign Investors.
Exchange Circular weblink: SEBI circular on “Clarification on participation of Eligible Foreign Investors (EFIs) in Commodity Derivatives in IFSC”.
Operational guidelines: Operational guidelines for FPIs & DDPs and EFIS
Operating Guidelines for Alternative Investment Funds (AIF)
As per SEBI circular SEBI/HO/IMD/DF1/CIR/P/143/2018 International Financial Services Centre (IFSC), Gift City could emerge as the hotspot for private equity funds and venture capitalists with the Securities and Exchange Board of India (SEBI) allowing alternative investment funds (AIFs) to operate from Gift City.
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Exchange Circular weblink: Operating Guidelines for Alternative Investment Funds (AIF) in International Financial Services Centre (IFSC)
Unique Client Code
Securities and Exchange Board of India (SEBI) vide its circular no. SMDRP/Policy/CIR-39/2001 dated July 18, 2001 made it mandatory for all stock brokers to use Unique Client Codes (UCC) for all the clients. Accordingly, all Members are required to allot a Unique Client Code to each of their clients, the said Client Codes are required to be uploaded along with the PAN details in the UCC system of the Exchange prior to the execution of trades.
As provided in SEBI (International Financial Services Centre) Guidelines, 2015 read with SEBI Circular IMD/HO/FPIC/CIR/P/2017/003 dated January 4, 2017, the following categories of clients are permitted in IFSC: i. Person not resident in India ii. Non-resident Indian iii. Financial Institution resident in India who is eligible under FEMA to invest funds offshore, to the extent of outward investment permitted. iv. Person resident in India who is eligible under FEMA, to invest funds offshore, to the extent allowed under the Liberalized Remittance Scheme of Reserve Bank of India, subject to a minimum investment as specified by SEBI, from time to time.
Further, services to clients referred to in clauses (ii) to (iv) are also subject to guidelines of Reserve Bank of India.
Trading Members may take note of India INX Circular no. 20170113-5 regarding allotment of Unique Client code (UCC) in INDIA INX.
Modification of Unique Client Code
Members are requested to take note of amendment in INDIA INX Circular No. 20170113-05 dated January 16, 2017 with Subject “Unique client code” Exchange has further decided to amend clause regarding ‘’MODIFICATION OF CLIENT CODES’’ which shall now be read as follows:
Modifications of client codes are not allowed in non-institutional trades.
Exchange Circular: Unique client code
Anti-Money Laundering and Combating Financing of Terrorism
The Prevention of Money Laundering Act, 2002 (PMLA) was brought into force with effect from 1st July 2005. As per the provisions of the PMLA, intermediary (including a stockbroker) registered under Section 12 of the Securities and Exchange Board of India Act, 1992 (SEBI Act) shall have to adhere to the client account opening procedures and maintain records of such transactions as prescribed by the PMLA and Rules notified thereunder. SEBI has issued a Master Circular No. CIR/ISD/AML/3/2010 dated December 31, 2010. All Trading Members of India INX are required to ensure compliance with the requirements contained in this Master Circular.
Exchange Circular: Anti Money Laundering and Combating Financing of Terrorism
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Further, SEBI has issued circular Ref no. SEBI/HO/MIRSD/DOP/CIR/P/2019/69 dated May 28, 2019 notifying modification made by Government in order dated August 27, 2009 (relating to the purpose of prevention of, and for coping with terrorist activities) by order dated March 14, 2019 for strict compliance.
Exchange Circular: Combating Financing of Terrorism (CFT) under Unlawful Activities (Prevention) Act.
Further, SEBI has issued circular Ref no. SEBI/HO/MIRSD/DOP/CIR/P/2019/113 dated October 15, 2019 notifying Guidelines on Anti-Money Laundering (AML) Standards and Combating the Financing of Terrorism (CFT) /Obligations of Securities Market Intermediaries under the Prevention of Money Laundering Act, 2002 and Rules framed there under.
Ref SEBI Circular: Guidelines on Anti-Money Laundering (AML) Standards and Combating the Financing of Terrorism (CFT)
Margin Information Report to Trading Members
A report “Margin Information Report to Trading Members” has been introduced by the Exchange for the benefit of the trading Members. Trading Members and third party trading application vendors need to take note of the above and make necessary changes to their trading application, as appropriate.
Exchange Circular: Margin Information Report to Trading Members
Reporting of Suspicious Transaction Reports
Trading Members are required, as part of PMLA compliance, to file Suspicious Transaction Reports (STRs) with Financial Intelligence Unit (FIU-IND) on a monthly basis. Further, trading Members are required to fill various details of Registration with FIU. The Members are required to Register the Entity with FIU-IND and also register a Principle Officer with FIU-IND.
Further, the Prevention of Money Laundering Act, 2002 (PMLA) and Master Circular of SEBI on AML/CFT dated December 31, 2010 require all intermediaries registered with SEBI to report suspicious transactions to the FIU-IND. Clause 13.1 of Master Circular of SEBI on AML/CFT dated December 31, 2010 states the following:
“In terms of the PML Rules, intermediaries are required to report information relating to cash and suspicious transactions to the Director, Financial Intelligence Unit- India (FIU-IND) at the following address:
Director, FIU-IND, Financial Intelligence Unit- India, 6th Floor, Hotel Samrat, Chanakyapuri, New Delhi-110021. Website: http://fiuindia.gov.in
INDIA INX Circulars weblinks: Reporting of Suspicious Transaction Reports Suspicious Transaction Reports (STRs) filed with FIU-India
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Commodity Hedging
Reserve Bank of India’s (RBI) Master Direction on Risk Management and Inter Bank dealings allow Residents in India approved by RBI to hedge price risk of permitted commodities in the international Exchanges/markets. It is clarified that Exchanges established in International Financial Services Centre (IFSC) also qualify as an international commodity exchange/market for the purpose of Master Direction issued by RBI on this subject.
Exchange Circular: Circular on Commodity Hedging in IFSC Exchanges
Cooling off for High Order to Trade Ratio (OTR) in Algorithmic Trading in INDIA INX
Order to Trade Ratio - the limits for the Transaction based OTR are set on the ratio between number of all order-entries (number of orders) and the number of trades per product and per day generated by orders and quotes sent by the Trading Members.
For the purpose of calculation of daily Order-to-Trade ratio, all algorithmic orders, i.e., order entry, order modifications and order cancellations shall be considered. It may further be noted that: a) If the algorithmic orders entered within ± 0.75% of the last traded price (LTP) of the respective contract, such orders shall not be included in the calculation of the aforesaid Order-to-Trade ratio. b) All other types of algorithmic orders and all algorithmic order cancellation requests shall be included. c) Orders placed under the liquidity enhancement schemes shall also be brought under the OTR framework
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 derivatives segment of INDIA INX for the first 15 minutes on the next trading day as a cooling off action. However, the trading Member shall be permitted to enter transactions in risk reducing mode during such cooling off period.
In order to discourage repetitive instances of high daily order-to-trade ratio, there will be an additional penalty in form of suspension of proprietary trading right of the trading Member for the first trading hour on the next trading day in case a trading Member is penalized for maintaining high daily order to trade ratio, provided penalty was imposed on the trading Member on more than ten occasions in the previous thirty trading days (on rolling basis).
Members may note that charges for High Order to Trade Ratio are mentioned below: Daily ALGO Order to Trade Ratio Charges (per ALGO order) Up to 50 NIL 50 to 250 01 Cents per 200 Orders More then 250 02 Cents per 200 Orders
Exchange Circular weblinks:
Cooling off for High Order to Trade Ratio (OTR) Penalty Charges on High Order to Trade Ratio (OTR)
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Rationalization of imposition of fines for false reporting of margins by Trading Members
SEBI vide its circular no. CIR/HO/MIRSD/DOP/CIR/P/2019/88, dated August 01, 2019, regarding “Rationalization of imposition of fines for false/incorrect reporting of margins or non-reporting of margins by Trading Member/Clearing Member in all segments”, had inter alia advised Stock Exchanges and clearing corporations, in consultation with one another, to devise a standard framework for imposition of fine on the trading Members / clearing Members for incorrect / false reporting and non – reporting of margin collected from the clients. The details of the same can be referenced from the below INDIA INX circulars.
Exchange Circular: https://www.indiainx.com/circulars/20191224-1/20191224-1.pdf Net worth Computation and Submission
Trading Members of the Exchange are required to submit the Net worth Certificate & Computation of Net worth as per the Exchange requirement.
Networth requirement (as per LC Gupta format provided in Schedule VI of the SEBI (Stock broker and Sub broker) Regulations, 1992.
Trading Members (TM) Trading and Clearing Member (TCM) Self-Clearing Member (SCM) 1 Crore 10 Crore 5 Crore
Exchange Circular: https://www.indiainx.com/circulars/20190408-1/20190408-1.pdf https://www.indiainx.com/circulars/20191010-1/20191010-1.pdf
System Audit reports (SAR)
The SEBI circular no. CIR/MRD/DMS/34/2013 dated November 6, 2013 and SEBI circular no. SEBI/HO/CDMRD/DEICE/CIR/P/2016/70 dated August 11, 2016 requires that Trading Members conduct system audits in accordance with the prescribed guidelines and detailed system audit framework enclosed in these circulars.
Accordingly, System Audit should be conducted with the following periodicity:
a) Annual system audit is prescribed for stock brokers who satisfy any of the following criteria.
I. Stock Brokers who use [Computer-to-Computer Link (CTCL) or Intermediate Messaging Layer (IML) / Internet Based Trading (IBT)/ Direct Market Access (DMA)/ Securities Trading using Wireless Technology (STWT) / Smart Order Routing (SOR) and have presence in more than 10 locations or number of terminals are more than 50.
II. Stock Brokers who are depository participants or are involved in offering any other financial services.
b) Half yearly system audit has been prescribed for stock brokers who use Algorithmic Trading or provide their clients with the facility of Algorithmic Trading as per SEBI Circular CIR/MRD/16/2013 dated May 21, 2013. c) For all other stock brokers, system audit shall be conducted once in two years.
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The framework lists the audit process, auditor selection norms, Terms of Reference for different types of brokers, risk management systems along with the Executive Summary Report format.
It also requires that all major audit findings, specifically in critical areas, are rectified / complied in a time bound manner by the Members failing which follow up inspection of may be taken up for necessary corrective steps / actions.
Exchange Circular: https://www.indiainx.com/circulars/20190327-2/20190327-2.pdf https://www.indiainx.com/circulars/20191007-2/20191007-2.pdf Internal Audit reports (IAR)
Trading Members / Clearing Members are required to carry out complete internal audit by independent qualified Chartered Accountants or Company Secretaries or Cost and Management Accountants who are in practice and who do not have any conflict of interest. All Members are required to submit the IAR on a half yearly basis by the submission date prescribed by the exchange.
The purpose of the audit is to examine that the processes, procedures followed and the operations carried out by the Trading Member/Clearing Member are as per the applicable Acts, Rules, Regulations, Bye-laws and Circulars prescribed by SEBI and the Stock Exchange.
Exchange Circular: https://www.indiainx.com/circulars/20190327-1/20190327-1.pdf https://www.indiainx.com/circulars/20191007-1/20191007-1.pdf
Audited Annual Accounts & Auditor’s Report
Trading Members of the Exchange are required to submit Audited Annual Accounts & Auditor’s Report (i.e. Complete Annual Report including Balance Sheet & Profit & Loss Account) for every financial year ended March 31.
As per SEBI Circular SEBI/HO/MIRSD/MIRSD2/CIR/P/2016/95 dated September 26, 2016, Stock brokers shall submit financial statements to Stock Exchanges in the same format as prescribed under Companies Act, 2013 irrespective of whether they fall under the purview of Companies Act, 2013 or not. The due date for submission of the aforesaid financial statements to Stock Exchanges shall be the same as prescribed under Companies Act, 2013 for submission to Registrar of Companies.
Exchange Circular: https://www.indiainx.com/circulars/20190906-1/20190906-1.pdf
Policy of Annual Inspection of Members by Stock Exchanges/Clearing Corporations
INDIA INX’s policy for annual inspection of its Members is formulated on the lines of the policy of annual inspection of Members prescribed by SEBI in consultation with the Exchanges vide circular no. CIR/HO/MIRSD/MIRSD2/CIR/P/2017/73 dated July 30, 2017.
The important features of the policy are listed below for ready reference.
Selection criteria for Annual Inspection of Members will be as follows:
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a. Stock brokers servicing investors, getting disabled on account of funds shortages on more than 3 times in a month shall be inspected irrespective of the fact of when they were last inspected. b. Stock brokers servicing investors, having overnight disablement on account of margin shortage for more than 2 days shall be inspected irrespective of the fact of when they were last inspected. c. Top 25 stock brokers paying high and recurring penalties for non-reporting or short reporting of margin/Client Code modification/CTCL mismatch fines or any other similar high risk compliance issue shall be inspected irrespective of when they were last inspected. d. Top 25 stock brokers in terms of investor complaints and arbitration cases filed by investors shall be inspected irrespective of the fact of when they were last inspected. e. Stock brokers having adverse observations in the internal audit report on high risk issues like wrong reporting of margins, transfer of trades, pledging of client securities, dealing with unregistered intermediaries etc., shall be inspected irrespective of the fact of when they were last inspected. f. Subsidiaries of Regional Stock Exchanges shall be inspected every year. g. Stock Exchange shall frame internal policy for selection of stock brokers for inspection based on inputs/alerts from Risk Based Supervision. h. Besides the above, the special purpose/limited inspections shall be carried out based on any triggers like patterns found during investor complaint resolution/Arbitration, complaints on specific malpractices of a broker or references from various authorities. The inspection shall be irrespective of the fact of when the last inspection was carried out. i. Apart from the above few stock brokers shall be selected by the Stock Exchanges on a random basis for inspection. j. Stock brokers who do not fall under any of the above category shall be inspected by the Stock Exchanges at least once in three years. k. Stock brokers selected on the above category shall be inspected for all segments and also for clearing activity if the stock broker is undertaking clearing for other stock brokers. l. Inspections of Professional Clearing Members shall be conducted by Clearing Corporations once in two years. Clearing activity undertaken by stock brokers for other stock brokers shall be inspected by Clearing Corporations. Other activities of stock brokers shall be inspected by Stock Exchanges. If Stock Exchanges and Clearing Corporations so desire, they can conduct joint inspections of stock brokers. Where Clearing Corporation has not been set up, Stock Exchange shall inspect all activities of stock brokers including activity of clearing for other stock brokers.
The Stock Exchanges/Clearing Corporations are advised to continuously assess the risks posed by their Members and review/revise the policy of annual inspection, as and when required, in consultation with SEBI. The Stock Exchanges shall establish an information sharing mechanism with one another on the important outcome of inspection of Members who hold multiple memberships of the Exchanges in order to improve the effectiveness of supervision and shall also bring cases of repetitive and / or serious violations to the notice of SEBI.
Exchange Circular: https://www.indiainx.com/circulars/20170704-2/20170704-2.pdf
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5 INFORMATION TECHNOLOGY
Connectivity
INDIA INX AND INDIA ICC Network has been designed with following broad goals: -
➢ High availability: The environment is required to run 24X7 with 22 hours of trading window. ➢ Low latency: Being international Exchange, all best practices necessary for providing lowest possible network latencies are considered. ➢ Scalability: Modular architecture for scaling without change in basic design
For Market participants, following connectivity options are available: -
5.1.1 Colocation facility:
1. Application for Colocation facility access
The Members need to login to online facility in INDIA INX IIEFS portal for the application of the colocation services provided by Exchange.
Refer to below link for IIEFS portal: https://iiefs.indiainx.com/
2. Hardware configuration & Rack space:
Sr. Description Configuration
1 Rack space 11 U Partitioned Rack space
2 x 14 Core Intel Processor, 128GB RAM, 2 x 1Gbps & 2 x 2 Server 10Gbps Network Port, Approximate 750 GB Disk capacity (RAID Group)
3 Solarflare Card 2 x 10 Gbps (If demanded)
3. Features of Colocation facilities a. Each participant will get 11U rack space (Quarter Rack) within INDIA INX COLO @GIFT City. Additional quarter can be allocated to Member with annual price of USD 3750 per annum. Each participant will have separate lock and key arrangement on rack partition door. b. The Member which has been recognized as Market Maker should be allocated maximum 4 quantity of servers. Rest all other category of Members should be allocated maximum 2 quantity of servers subject to availability of stock in hand. c. In case of additional server’s requirement by any of category Members, Member has to arrange the servers by their own. INDIA INX team will facilitate for first level of support. d. For the Members who requires dedicated full or half rack quarter, same will be charged. Details of applicable charges is mentioned in circular 20180216-1 27
e. Each participant server/switch will be equidistant from INDIA INX gateway servers using 10Gbps fibre drop. Charges of 10Gbps fibre drop will be as per circular 20190814-2 f. Participants availing their private lines through operators to their respective sub-rack will be provided cross connect copper connectivity. For fibre cross connectivity Member need to manage with respective ISP in concurrence with INDIA INX. Member need to apply in IIEFS portal for cross connect as per circular 20190924-1 g. There is a provision of Internet based VPN (Virtual Private Network) connectivity at INDIA INX end. Members who wish to avail Internet, VPN would require network device with IPSEC license and static IPV4 public IP at their respective offices to use this VPN. h. Member is recommended to put their equipment with management port functionality & dual power sources provisioning. All the racks are having provisioning of Dual UPS power source and DG backup will be provided for uninterrupted power. i. Provision is made to provide fair and equal opportunity of co-location services to each Member.
4. Readiness
The delivery time by Exchange will be 2 working days from the Member approved application in IIEFS. INDIA INX Team will extend support to Members for OS (operating systems) & drivers installation and other helps. For smooth functionality of servers, Members are requested to use supported version of OS.
5. DC Access & Connectivity a. Due to security reasons, physical access to co-location facility will be restricted only to the initial set up and access for periodic or urgent maintenance if any would be only with prior permission from INDIA INX. b. Members may take one or more leased line to the colocation facility from any telecom service provider for the purpose of setting up or modifying parameters, trading related activities and hardware, software, network related access, software download/upload and monitoring and data downloads. c. As point to point links between Member’s server/rack space and their offices does not lie on the trading/data dissemination path of the Exchange, so they are not within the purview of the Exchange. Point to point links are procured by, paid for and maintained by the Members without Exchange intervention therefore INDIA INX shall not responsible for quality or latency or any other performance parameters of connectivity provided by point to point vendors to colocation trading Member. 6. Additional responsibility & Guidelines a. If Members want to deploy any hardware, software or any other facility not provided by Exchange then they have to arrange required facilities on their own and deploy at their dedicated racks located at INDIA INX colocation data centre on such terms and conditions as agreed between the concerned Member and Exchange.
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b. Members shall arrange all the necessary hardware and software required to utilize the said colocation services provided by Exchange. INDIA INX would not be responsible for insuring the Member assets at the co-location premises. c. Member need to arrange appropriate firewall devices for data/application security as well as OS level security to protect external virus/spam/malware attack. d. The Members are required to ensure compliance with requirements of the laws/regulations/requirements prescribed by SEBI/Exchange or any other relevant authority as in existence or as may be modified/amended from time to time while availing the facility and maintain the integrity of the securities market. e. Members shall be responsible to obtain necessary regulatory permission from authorities such as GIFT IFSC SEZ, Customs etc. as required to carry their equipment inside/outside from GIFT IFSC SEZ.
7. Other Terms & Conditions a. INDIA INX reserves the right to render certain Members/authorized vendor ineligible from further participation in the INDIA INX, if they fail to follow the policy or engage in activities that are detrimental to the development of the market. b. INDIA INX will provide co-location facility on best efforts basis and does not solicit any particular vendor and any trading or other risks arising out of usage of the opted services are sole responsibility of Members of the Exchange. c. INDIA INX will not be responsible for any direct/indirect/consequential, harm/loss/damage of any kind for whatsoever reason including but not limited to power failure, air conditioning failure, system failure and loss of connectivity. d. INDIA INX shall not be liable for any stoppage in co-location facility owing to legal or regulatory requirement.
8. Discontinue / Termination
In case Member wants to discontinue the availed services, they are required to intimate exchange by sending an email to their respective relationship manager and Colocation team on [email protected]
5.1.2 Leased Line
Market participant office within GIFT area can avail 10 Mbps leased line facility for connecting to INDIA INX. Please refer the Exchange Circular number 20180813-3 for charges.
a. Connectivity provisioning at Market participant’s (MP) office is done based on MP’s requirements. The connectivity will be is provisioned only on MP’s name. Franchise names are not eligible to apply. The application form and its related undertaking are to be electronically filed using below URL https://iiefs.indiainx.com
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b. INDIA INX will issue networking gear to participant’s office at the time of connectivity provisioning. This networking gear will be property of INDIA INX & and has to be surrendered at the time of connectivity cancellation. This gear will be in control of INDIA INX and Member is required to ensure that relevant site requirements are maintained at all the time for gear to function smoothly. c. The networking gear will be under comprehensive maintenance with INDIA INX assigned vendor. Routine faults/replacement will be done at no extra charge to Members. However, if the gear fails due to negligence on part of Member, INDIA INX reserves right to recover part or full cost from Member.
d. Member’s office will be assigned an IP subnet & Member can allocate IP address to their terminals within this provided subnet. The Member’s internal network should be very much segregated from INDIA INX assigned subnet. e. Connectivity charges are bundled for entire service which includes amortised capital cost component of network gear, link costs towards operator lease, maintenance cost of the network gear and provision of disaster recovery. Recovery of these charges are yearly in advance. The guiding principle in devising these charges is that the network will be operated on “Not for Profit” basis. For most of market participants, recovery is through internal billing. f. Shifting of Leased lines between offices is subject to feasibility from the existing telecom service provider with One time cost USD 175 as per Exchange Circular 20180622-1.In case of non-feasibility from the existing provider, Member has to apply for new circuit in case any other telecom service provider is feasible. g. INDIA INX provided network equipment should be properly maintained in dust free environment with proper air conditioning and UPS power supply. The output voltages from UPS should be in range 220 V – 240 V with Neutral to Earth voltages less than 2 volts. h. Lock-in period for Leased line is of 1 year. Thereafter, proportionate refund from yearly charges with 1 months’ notice period shall be applicable. 5.1.3 Internet
INDIA INX also has applications hosted on web. To access these applications, market participant needs to have their respective internet link and application passwords. Email ID for application assistance is available on respective services URLs.
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Application Parameters 5.2.1 Boltplus Configuration Parameters (Production, Disaster Recovery, Simulation) PRODUCTION NFCAST MDI RDI(Incremental) RDI(Snapshot) Connection Segment Gateways Service Service Service Service EMDI EOBI Gateway Service B Service B Service B
A A A A
10.253.253.6
(CLICK TCP IP 10.253.253.6 to UDP 225.0.0.1 225.0.0.7 225.0.0.8 225.0.0.3 225.0.0.4 225.0.0.5 225.0.0.6 (CLICK HERE) HERE) INDIA INX 10.253.253.7 16906 to Port 16908 16901 16907 16908 16903 16904 16905 16906 16920
DISASTER RECOVERY (DR) NFCAST MDI RDI(Incremental) RDI(Snapshot) Connection Segment Gateways Service Service Service Service EMDI EOBI Gateway Service B Service B Service B
A A A A
10.243.243.6
(CLICK TCP IP 10.243.243.6 to UDP 225.0.0.1 225.0.0.7 225.0.0.8 225.0.0.3 225.0.0.4 225.0.0.5 225.0.0.6 (CLICK HERE) HERE) INDIA INX 10.243.243.7 16906 to Port 16908 16901 16907 16908 16903 16904 16905 16906 16920
SIMULATION Connection Gateways NFCAST MDI RDI(Incremental) RDI(Snapshot) Segment EMDI EOBI
Gateway IPS Service A Service A Service B Service A Service B Service A Service B
(CLICK (CLICK
IP 10.255.254.6 10.255.254.6 226.1.0.131 226.1.0.136 226.1.0.137 226.1.0.132 226.1.0.133 226.1.0.134 226.1.0.135 TCP UDP HERE) HERE) INDIA INX 13406 to Port 13408 13431 13436 13437 13432 13433 13434 13435 13410
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EMDI INDIAINX PRODUCTION & DR Incremental Snapshot Feed Name Service A Service B Service A Service B IP 225.0.0.9 225.0.0.10 225.0.0.11 225.0.0.12 Stream 1 Port 16909 16910 16911 16912 IP 225.0.0.13 225.0.0.14 225.0.0.15 225.0.0.16 Stream 2 Port 16913 16914 16915 16916 IP 225.0.0.17 225.0.0.18 225.0.0.19 225.0.0.20 Stream 3 Port 16917 16918 16919 16920 IP 225.0.0.21 225.0.0.22 225.0.0.23 225.0.0.24 Stream 4 Port 16921 16922 16923 16924
EOBI INDIAINX PRODUCTION & DR Incremental Snapshot Feed Name Service A Service B Service A Service B IP 225.0.0.41 225.0.0.42 225.0.0.43 225.0.0.44 Stream 1 Port 16941 16942 16943 16944 IP 225.0.0.45 225.0.0.46 225.0.0.47 225.0.0.48 Stream 2 Port 16945 16946 16947 16948 IP 225.0.0.49 225.0.0.50 225.0.0.51 225.0.0.52 Stream 3 Port 16949 16950 16951 16952 IP 225.0.0.53 225.0.0.54 225.0.0.55 225.0.0.56 Stream 4 Port 16953 16954 16955 16956
EMDI INDIAINX SIMULATION Incremental Snapshot Feed Name Service A Service B Service A Service B IP 226.1.0.139 226.1.0.140 226.1.0.141 226.1.0.142 Stream 1 Port 13439 13440 13441 13442 IP 226.1.0.143 226.1.0.144 226.1.0.145 226.1.0.146 Stream 2 Port 13443 13444 13445 13446 IP 226.1.0.147 226.1.0.148 226.1.0.149 226.1.0.150 Stream 3 Port 13447 13448 13449 13450 IP 226.1.0.151 226.1.0.152 226.1.0.153 226.1.0.154 Stream 4 Port 13451 13452 13453 13454
EOBI INDIAINX SIMULATION Incremental Snapshot Feed Name Service A Service B Service A Service B IP 226.1.0.155 226.1.0.156 226.1.0.157 226.1.0.158 Stream 1 Port 13455 13456 13457 13458 IP 226.1.0.159 226.1.0.160 226.1.0.161 226.1.0.162 Stream 2 Port 13459 13460 13461 13462 IP 226.1.0.163 226.1.0.164 226.1.0.165 226.1.0.166 Stream 3 Port 13463 13464 13465 13466 IP 226.1.0.167 226.1.0.168 226.1.0.169 226.1.0.170 Stream 4 Port 13467 13468 13469 13470
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5.2.2 Other Application Connection Details
For peripheral applications, the URL’s for working over leased lines / internet are given in table below.
Production application URL details
Sr. No. APPLICATION CONNECTIVITY URL
Real Time Risk Leased Line http://10.1.150.1/stocks/jsp/rms/index.html Management 1 System Internet (RTRMS) https://rtrms.indiainx.com
Collateral and Internet https://class.indiainx.com/application/applogin/login.aspx 2 early pay – in (CLASS) Lease line https://10.1.150.4/application/applogin/login.aspx
Unique Client Internet http://ucc.indiainx.com/newucc/admin/presentationlayer/login.asp# 3 Code (UCC) Leased Line https://10.1.150.7/newucc/admin/presentationlayer/login.asp#
Internet https://member.indiainx.com/extranet_login.aspx 4 Extranet Leased Line https://10.1.150.5/extranet_login.aspx
BANK Internet https://member.indiainx.com/bankextranet 5 EXTRANET Lease Line https://10.1.150.5/bankextranet
Global 6 Securities Internet Market https://gsm.indiainx.com
Internet https://les.indiainx.com 7 LES Lease Line http://10.1.150.8:6080/stocks/jsp/LEIPS/index.html
Internet https://crs.indiainx.com/LoginCredential.aspx 8 CRS Lease Line https://10.1.150.11/LoginCredential.aspx
9 IIEFS Internet https;//iiefs.indiainx.com
Internet https://boltplusuploads.indiainx.com 10 BOW Upload Lease Line http://10.1.150.10
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The EXE based applications are available for download at URL:
APP NAME URL for EXE download
BOLTPLUS Front End http://www.indiainx.com/static/trading_application.aspx
Online Trade Dissemination http://www.indiainx.com/static/online_trade.aspx
DR application URL details:
Sr. No. APPLICATION CONNECTIVITY URL
Real Time Risk Leased Line http://10.1.160.1/stocks/jsp/rms/index.html Management 1 System Internet (RTRMS) https://rtrms1.indiainx.com
Collateral and Internet https://class1.indiainx.com/application/applogin/login.aspx 2 early pay – in (CLASS) Lease line https://10.1.160.4/application/applogin/login.aspx
Unique Client Internet http://ucc1.indiainx.com/newucc/admin/presentationlayer/login.asp# 3 Code (UCC) Leased Line https://10.1.160.7/newucc/admin/presentationlayer/login.asp#
Internet https://member1.indiainx.com/extranet_login.aspx 4 Extranet Leased Line https://10.1.160.5/extranet_login.aspx
BANK Internet https://member1.indiainx.com/bankextranet 5 EXTRANET Lease Line https://10.1.160.5/bankextranet
Global 6 Securities Internet Market https://gsm1.indiainx.com
Internet https://les1.indiainx.com 7 LES Lease Line http://10.1.160.8:6080/stocks/jsp/LEIPS/index.html
Internet https://crs1.indiainx.com/LoginCredential.aspx 8 CRS Lease Line https://10.1.160.11/LoginCredential.aspx
9 IIEFS Internet https;//iiefs1.indiainx.com
Internet https://boltplusuploads1.indiainx.com 10 BOW Upload Lease Line http://10.1.160.10
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System requirement for trading application
Minimum recommended configuration of trading terminals.
Suggested Configuration of BOLTPlus and BEST Front Description End
System Configuration Intel core 2 duo / i3 or equivalent configuration
Memory 8 GB RAM minimum
Network cards 1 Ethernet ports
Minimum internet 2 mbps bandwidth
Free Disk space 100 GB minimum
Display Resolution 1024 X 768
OS Windows 7 / Windows 10
Software .Net framework 4.0 or above
ETI and EMDI/EOBI is completely software and hardware independent. The Member can use his discretion to decide what their requirement is and plan the hardware configuration accordingly.
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