Settlement Mechanism

Funds settlement shall be effected through designated clearing banks of NCL. Every participant shall be required to have a separate settlement account with one of the approved clearing banks for commodity Derivatives Fund settlement. All the funds settlement will be conducted by effecting debits / credits through electronic transfer of funds in the accounts of participants clearing bank accounts.

The pay-in and pay-out of mark to market settlement, final settlement of commodity derivatives, additional settlement shall be effected in accordance with the settlement schedule issued by the Clearing Corporation periodically. Along with mark to market settlement and final settlement of commodity derivatives there are few other transactions which are effected in settlement. The said transactions include EPI, Margin, Penalty, CTT, ABC/BC collection/release. These transactions are part of settlement which gets collected/released from/to members settlement account.

Funds Supplementary Settlement would happen on basis of Quality difference, Quantity difference, Delivery center, Packaging cost and penalty for short delivery. For such instances, NCL would create transactions and collect the same (Pay-in/Pay-out) from the clearing members. NCL will create funds transactions as a sum of compensation amount and replacement cost which is cumulatively termed as penalty and funds will be collected from the defaulting seller as a part of supplementary settlement.

NCL sends pay-in obligation reports to clearing banks on clearing day mentioning the details of transactions of members along with amount for arrangement of funds on settlement day.

Fund shortage handling

Buyer default is not permitted. Commodity pay-out shall not be executed to the receiver in case of fund shortage by the buyer