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Chilli Contract Desciption
Chilli Contract Desciption
No.2/2/2012/NCDEXCSSpices/MDII Date2
nd
April,2014
To,
TheChiefComplianceOfficer,
NationalCommodityandDerivativesExchangeLtd.,
AkrutiCorporatePark,1
st
floor,LBSRoad,
KanjurMarg(West), MUMBAI400079.
Subject:ApprovalforfuturestradinginChilliTejaatNCDEX
Sir,
3. Thepermissionfortheabovecontractsshallalsobesubjectto:
(i) The limits on open position of each member and nonmember client and the limit on daily price
fluctuationareasspecifiedinthecontractspecifications.
(ii) Once the contracts are commenced, no terms of the contract specifications should be changed
withoutpriorapprovaloftheCommission.
(iii) The permission granted for the said contracts is subject to daily Mark to Market settlement of
outstanding contracts as per the procedure and delivery mechanism/ process specified in the Byelaws,
RulesandRegulationsoftheExchange.
1. The Exchange shall intimate the Commission soon after the trading in the above said contracts is
commencedandforwardthedetailsofthetradingactivityinReturnIandIItotheCommissionattheclose
ofBusinesshourseveryday.
2. Exchange shall send to the Commission a monthly report on the functioning of the various
contractsinrespectoftheabovementionedcommodityalongwithmarketreport.
7. As far as agricultural contracts are concerned, apart from the approved quality standards, the
Exchange should ensure that the commodity deposited should comply with the regulations laid down by
theotherauthoritieslikeFoodSafetyStandardsAuthorityofIndia,AGMARK,BISetc.
8. The contents of this letter may please be notified to the trade immediately and the circulars
releasedbytheExchangefromtimetotimeshouldalsobesenttotheCommission.
9. Exchange may post the details of the contracts and its specifications on the website immediately
uponthereceiptofthisletter.
Yoursfaithfully,
Sd/
(UshaPralhadPol)
Director
Encl:asabove
AnnexureI
ContractspecificationofChilliTejaatNCDEX
TypeofContract FuturesContract
Nameofcommodity ChilliTeja
Tickersymbol CHILLI
Tradingsystem NCDEXTradingSystem
Basis Chilli(Paala)tradedasTejadeliverytotheSellersspecified/
nominatedwarehouseKhammamexclusiveofSalesTax/VAT
Unitoftrading 5MT
Deliveryunit 5MT
Maximumordersize 250MT
Quotation/Basevalue Rs.PerQuintal
Ticksize Rs.2
Qualityspecification ChilliTeja
ColourBrightRed
Length
Notlessthan4cms
Chillieslessthan4cmswillbeallowedtoamaximumof5%by
weight
Moistureshouldnotbemorethan11%
Foreignmattershouldnotbemorethan1%
BrokenChilliesshouldnotbemorethan3.5%*
Looseseedsshouldnotbemorethan0.9%**
Unripeandmarkedfruitsshouldnotbemorethan1.9%**
Insectdamagedmattershouldnotbemorethan1%
Capsaicincontentshouldnotbelessthan60,000SHU
*Toleranceupto0.5%oftheabovelimitonlyintheoutbound
deliverieswillbeallowed;
**Toleranceupto0.1%oftheabovelimitonlyintheoutbound
deliverieswillbeallowed
Quantityvariation +/2%
Deliverycenter Khammam(uptotheradiusof50Kmsfromthemunicipallimits)
Additionaldeliverycentre Guntur(uptotheradiusof50Kmsfromthemunicipallimits)
LocationPremium/DiscountasnotifiedbytheExchangefromtimeto
time.
HoursofTrading AsperdirectionsoftheForwardMarketsCommissionfromtimeto
time,currently:
MondaysthroughFridays:10:00a.m.to5:00p.m.TheExchangemay
varytheabovetimingwithduenotice.
DeliveryLogic CompulsoryDelivery
Openingofcontracts Tradinginanycontractmonthwillopenonthe1
st
dayofthemonth.If
1
st
happenstobeanontradingday,contractswouldopenonthenext
tradingday
TenderPeriod
TenderDateT
TenderPeriod:Thetenderperiodshallstarton11
th
ofeverymonthin
which the contract is due to expire. In case 11
th
happens to be a
Saturday, a Sunday or a holiday at the Exchange, the tender period
wouldstartfromthenextworkingday.
PayinandPayout:
IfthetenderdateisTthen,FundsPayInhappensatT+2,andPayOut
happensatT+8.Ifanysuchday happens tobe aSaturday,aSunday
or a holiday at the Exchange, clearing banks or any of the service
providers, PayIn/ PayOut would be effected on the next working
day.
DeliveryMechanism DirectDelivery
Closingofcontract
Clearing and settlement of contracts will commence with the
commencement of Tender Period by compulsory delivery of each
open position tendered by the seller between T+3 to T+7 to the
corresponding buyer matched by the process put in place by the
Exchange.
Tolerancelimitforoutbounddeliveries:
Commodity
Specifications
Basis Acceptablequalityrange
aspercontract
specifications
PermissibleTolerance
Quality Teja
Colour BrightRed
Length
Notlessthan4cms
Chillieslessthan4cm
willbeallowed
5%maxweight
Moisture 11%Max
Foreignmatter 1%Max
BrokenChillies 3.5%Max +0.5%
Looseseeds 0.9%Max +/0.1%
Unripeandmarked
fruits
1.9% +/0.1%
MaxLoss(forallthecharacteristics) +/0.5%
AnnexureII
ChilliTeja
ContractLaunchcalendar
ContractLaunchMonth ContractExpiryMonth
Onreceiptofapprovalfromthe
Commission
April2014,June2014,July2014,
August2014,September2014
May2014 NoLaunch
June2014 October2014
July2014 November2014
August2014 December2014
AnnexureIII
Directdeliverymechanism(DirectDeliverySellersWarehouseModel)
SalientFeatures
1. Theproposeddirectdeliverymechanism,exactlyreplicatesthatinthephysicalmarket,andessentiallyrequiresthe
allocated buyer, to arrange for assaying by Exchange approved assayer, at the sellers warehouse, and lift goods
directlyfromthere.
2. Goodstenderedbyaseller,shouldbefromacoldstorage,wouldnecessarilyhavetobeassayed&liftedbybuyerif
foundwithinthespecificationsbytheAssayer.
3. All Premium/ Discount related to quality, based on the report of the Exchange approved assayer, would be
applicable
4. In case the goods tendered for delivery, on assaying, fails to conform to the tenderable range of contract
specifications,itwouldconstituteaSellersdefault.
5. The process would not involve any kind of deposit in Exchange approved warehouses, and therefore no Validity,
FEDorStandardDeductionswouldbeapplicable.
T+1
3. Thedetailsofallocationdisplayedtobuyersandsellerssothatrequiredinformationcanbeupdated.
4. Exchange will allot an empanelled assayer to the respective buyer upon the tender and the buyer has to
compulsorilygetthegoodsassayedbytheallottedassayer.
5. TheappointedassayerwouldhavetoconfirmhisavailabilitybyT/E+1.Ifhedoesntconfirm,thenanotherassayer
wouldbeappointed.
T+2
1. PayinoffundsfromallocatedBuyersonbasisgrade
2. Sellerwillgivedetailsofwarehouseatdeliverylocation(within50kmradius)
3. Buyerwillgivedetailsfortaxsettlement,andcorrespondenceaddress
4. Sellerwillgivedetailsforcorrespondenceaddress
T+3toT+7AssayingandLiftingPeriod
1. Dependingonthetotalallocated quantity,Assayerwillinformboththebuyerandsellerofthe deliveryschedule,
sothattheassayingresultsareavailabletoExchangelatestbyEODonT+7.
2. Buyerwillliftthegoodsfromthesellersinformedlocation.
3. AllBuyerswhohavebeenallocateddeliverieswouldnecessarilyhavetoassay&liftthegoods,iffoundwithinthe
specificationsbytheAssayer,andfollowtheprocessasprescribedbytheExchange,andbearallcostsassociated
withit.IncasethebuyerfailstoliftgoodsbyE+7,itwillbeconsideredasBuyersdefaulttotheextentofgoodsnot
liftedandapplicablepenaltiesshallbelevied.
4. Assayerwillbepresentatsellersinformedlocation,accordingtothedeliveryschedule,andwillconductassaying
ofgoods.
5. Assayer will upload the report of quality and quantity of goods and accordingly accept/reject the goods, as per
Exchangespecifiedqualitynorms.
6. Buyerwillgivenecessarydetailstotheexchangefortaxsettlement.
7. Seller&Buyerortheirrepresentativeshaveanoptiontosupervisetheassayingprocess.
8. Assayerwillgivefinalconfirmationfordelivery.
9. TheentireprocessneedstobecompletedbyT+7EOD.
10. AllriskandcostsassociatedwithstorageofgoodsintheSellerswarehouse,fortheentiredurationofassaying,i.e.
tillthetimesettlementiscompleted,wouldbebornebytheSeller.
T+8(PayOut)
Case1thegoodsareaccepted
Payouttoseller
TaxdetailswillbepassedontoSellertobeupdated
Case2thegoodsarerejected
ThiswillbeconsideredasSellersdefaultandapplicablepenaltiesshallbelevied
T+9
SettlementofTax
SellerissuesInvoice
DeliveryDefaults
SellersDefaultThiscouldhappenunderthefollowingsituations
Case1:Sellerdoesnotmarkdeliveryintentionbeforeexpiryofthecontract
Case2:Sellerfailstodelivergoodsaftergivinganintentionandallocation
Case3:ThelotdeliveredbySellerfailsonassaying
Case4:ThelotassayedbythebuyerwithanExchangeapprovedassayer,andstacklockedsubsequently,iflaterfoundto
havebeentamperedordamagedinanyway,atthedayoflifting
Case5:IfthelotscouldnotbeliftedbytheBuyerwithinthestipulatedtimeframe,duetoestablishedissuesattheSellers
end,thenpenaltyfortheproportionateunliftedlotswouldbeimposedonSeller
Incaseofsellerdefault,theprescribedpenaltywillbe3%andwillbeusedasunder;
a) 1.75%componentofthepenaltyshallbedepositedintheInvestorProtectionFundoftheExchange;
b) 1%componentofthepenaltyshallgototheBuyerwhowasentitledtoreceivedelivery;and
c) Balance0.25%componentofpenaltyshallberetainedbytheExchangetowardsadministrativeexpenses.
d) ThispenaltyshallbesettledonT+8
ThedifferencebetweentheFinalSettlementPrice(FSP)andtheaverageofthreehighestofthelastspotpricesof8(Eight)
succeedingdaysaftertheexpiryofcontract(T+1toT+8days),iftheaveragespotpricesodeterminedishigherthanFSP
willalsobechargedtotheseller.ThisdifferentialpenaltyshallbesettledonT+9andwillgotothebuyer.
BuyersDefaultThiscouldhappenunderthefollowingsituations
Case:1Buyerfailstogetassayingdonewithinthestipulatedtimeframe,i.e.ifthereportisnotsubmittedbyEODonT+7
forwhatsoeverreasons
Case2:Buyerfailstoliftsomeorallofthelotswithinliftingperiod(T+3toT+7)
thebuyerwouldbepenalizedand3%penaltywillbeleviedonbuyerandwillbeusedasunder:
a) 1.75%componentofthepenaltyshallbedepositedintheInvestorProtectionFundoftheExchange;
b) 1%componentofthepenaltyshallgototheSellerwhowassupposedtogivedelivery;and
c) Balance 0.25 % component of penalty shall be retained by the Exchange towards administrative
expenses
d) ThispenaltyshallbesettledonT+8
ThedifferencebetweentheFinalSettlementPrice(FSP)andtheaverageofthreelowestofthelastspotpricesof8(Eight)
succeedingdaysaftertheexpiryofcontract(T+1toT+8days),iftheaveragespotpricesodeterminedislowerthanFSP
willalsobechargedfromthebuyer.ThisdifferentialpenaltyshallbesettledonT+9andwillgototheseller.
ThedeliverypayintakenfromthebuyershallberefundedonT+8incaseofbuyersdefault.
ThedeliverypayintakenfromthebuyershallberefundedonT+8incaseofsellersdefault.