Commodity Derivatives-Voluntary Close out Facility

The Voluntary Close out facility enables members to voluntarily define a margin limit beyond which all the orders would get risk managed thereby preventing him from getting disabled by virtue of execution of such orders. Voluntary Close out limits for open interest enables member to define position limit beyond which all the orders will be check for trading member level position limit violations thereby preventing from getting disabled for particular underlying symbol.

Members desirous of availing the facility shall define a margin utilization limit/open interest limit in NCMS i.e., a Upper limit to move into Voluntary Close out mode and a Lower limit to move out of Voluntary Close out mode. Clearing Members can set VC limits for margin only, whereas trading members can set VC limits for margin as well as open interest.

In the Voluntary Close out mode members are permitted to create fresh positions and also close out the existing positions. All orders received in the Voluntary Close out mode are validated at the applicable margins for sufficiency of available capital/sufficiency of position limit for such security/index prior to acceptance of the orders.

In Voluntary Close out mode for margin the following shall apply:

• In case of Clearing Member all Trading Members under such Clearing Member shall also move in the Voluntary Close out Mode
• All outstanding orders shall get cancelled
• Members shall be permitted to create fresh positions and also close out the existing positions
• Incoming orders shall be risk managed for sufficiency of margins
• Members shall not be allowed to place orders with custodial participant code
• Clearing members will not be allowed to Approve/Reject trades.
• Trade modification shall not be permitted
• Member shall be allowed to modify the lower limit.

In Voluntary Close out mode for open interest the following shall apply:

• Outstanding orders only for such security shall get cancelled
• Incoming orders shall be risk managed for sufficiency of position limit for such security/index
• Members shall not be allowed to place orders with custodial participant code for such security/index
• Trade modification shall not be permitted
• Member shall be allowed to modify the lower limit