Apart from providing payment security, exchange is
also the counter-party for all transactions. Thus, the participants need
not know and be concerned about the risk-profile of the other party.
The exchange collects requisite margins (listed
below) before trading and the delivery to ensure payment security
In the day-ahead market a Member or
the Client is allowed to transact only when the margin deposited by the
Member or the Client is at least or equivalent to the average value of
transactions done by it for last seven (7) days; or the initial margins
prescribed by the Exchange for any Member or the Client.
In the Term Ahead Market the Member
or Client will have to make available the following types of margins to
the Exchange from time to time as described below:
- Initial Margin (Operational Limit):
Initial Margins are computed on the total order value. This initial
margin is blocked automatically from the total available deposits. The
trading system will automatically reject orders in case the initial
margin exceeds the balance deposits available.
- Basis Margin: Additional Margin
is computed as a percentage of the traded value as per the risk curve
defined and are collected in different trenches as per the contract
- Variation Margin: The Exchange on a pre decided day also computes the Variation Margin of Members based on their trades (open position).
- Extreme Loss: The Exchange may
collect any ad hoc margins from time to time in case if it feels that
the available margins collected by the exchange are inadequate due to
variation in the prices in the Market.
*All the above mentioned margins can be deposited
in form Cash, Bank-guarantee (BG), Fixed-deposit (FD) and Letter of
Credit (LC). Please check Rules and Byelaws and circulars of the
exchange the relevant margins and collaterals available for meeting such
In the REC Market, Member is allowed to place a
purchase order against cash amount made available, equivalent to 100% of
the order value. After receiving confirmation about availability of
RECs in the depository account of Eligible Entity from the nodal agency
(NLDC), the exchange proceeds to process the final bid matching
solution. The bids of the Sellers for whom the balance in the depository
account with the central agency is reported short, is not considered.
For more details refer to the business rules of the company, available at: http://www.iexindia.com/legaldocuments/rules_laws/businessrules.aspx