3. 4 5 6 Passport/ Voters Identity Card/ Registered Lease or Sale Agreement of Residence/ Driving License/ Flat Maintenance bill/ Insurance Copy. Utility bills like Telephone Bill (only land line), Electricity bill or Gas bill - Not more than 3 months old. Bank Account Statement/Passbook -- Not more than 3 months old. society/Multinational Proof of address issued by any of the following: Bank Managers of a Commercial Banks/ Co-Operative Foreign Banks/Gazetted Officer/Notaries public/Elected representatives to the Legislative Assembly/Parliament/Documents issued by any Govt. or Statutory Authority. Identity card/document with address, issued by any of the following: Central/State Government and its Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Commercial Banks, Public Financial Institutions, Colleges affiliated to Universities and Professional Bodies to their Members. The proof of address in the name of the spouse may be accepted. D. In case of Non-Individuals, additional documents to be obtained from non- individuals, over and above the POI and POA, as mentioned below: Types of entity Corporate Documentary requirements Copy of the balance sheets for the last 2 financial years (to be submitted every year). list of all Copy of thoseholding control, either directly or indirectly, in the company duly certified by thecompanysecretary/Whole time director/MD (to latest shareholdingstructure including 73 G.N. No. 146 (contd.) Commodity Exchanges every year). be submitted Photograph, POI, POA, and TIN numbers of whole time directors/two directors in charge of day to day operations. Photograph, POI, POA, PAN of individual promoters holding control - either directly or indirectly. Copies of the Memorandum and Articles of Association and certificate of incorporation. Copy of the Board Resolution for investment in commodity market. Copy of Board Resolution or declaration (on the letterhead) naming the persons authorized to deal in commodity derivatives on behalf of company/firm/others and their specimen signatures. Partnership firm submitted every year). Copy of the balance sheets for the last 2 financial years (to be Certificate of registration (for registered partnership firms only). Copy of partnership deed. Authorized signatories list with specimen signatures. Photograph, POI, POA, of Partners. Trust submitted every year). Copy of the balance sheets for the last 2 financial years (to be Certificate of registration (for registered trust only). Copy of Trust deed. List of trustees certified by managing trustees/CA Photograph, POI, POA, PAN of Trustees. Government Bodies Self-certification on letterhead. Authorized signatories list with specimen signatures. Registered Society Copy of Registration Certificate under Societies Registration Act. List of Managing Committee members. Committee resolution for persons authorized to act as authorized signatories with specimen signatures True copy of Society Rules and Bye Laws certified by the Chairman/Secretary 74 G.N. No. 146 (contd.) Commodity Exchanges _____________ EIGHTH SCHEDULE ____________ (Under Regulation 32) RISK DISCLOSURE DOCUMENT The intermediary neither expressly or impliedly guarantee nor make any representation concerning the completeness, the adequacy or accuracy of this disclosure documents nor has the intermediary endorsed or passed any merits of commodities traded on the exchange. This brief statement does not disclose all of the risks and other significant aspects of trading. You should, therefore, study commodity trading carefully before becoming involved in it. In the light of the risks involved, you should undertake transactions only if you understand the nature of the contractual relationship into which you are entering and the extent of your exposure to risk. You must know and appreciate that investment in commodity contracts or other instruments traded on the Commodity Exchange(s), which have varying element of risk, is generally not an appropriate avenue for someone of limited resources/ limited investment and/ or trading experience and low risk tolerance. You should, therefore, carefully consider whether such trading is suitable for you in the light of your financial condition. The Client shall be solely responsible for the consequences and no contract can be rescinded on that account. You must acknowledge and accept that – (a) (b) there can be no guarantee of profits or no exception from losses while executing orders for purchase and/or sale of a commodity contracts being traded on a commodity exchange; that your dealings on the Exchange through a member shall be subject to your fulfilling certain formalities set out by the member, which may, inter alia, include your filing the know your client form and are subject to Rules, Byelaws and Business Rules of the Exchange guidelines and circulars prescribed from time to time; (c) the intermediary provide advice to the client and shall not be liable to any person who enters into any business relationship with any third party based on advise by the intermediary; (d) No consideration to trade shall be made without thoroughly understanding and reviewing the risks involved in such trading. If you are unsure, you must seek further professional advice on the same. (e) In considering whether to trade, you should be aware of or must get acquainted with the following basic Risks involved in the trading of Commodity Contracts and other Commodity Derivatives Instruments on the Exchange. 75 Commodity Exchanges G.N. No. 146 (contd.) (i) Risk of Higher Volatility Volatility refers to the dynamic changes in price that commodity contracts undergo when trading activity continues on the Commodity Exchange. Generally, the higher the volatility of a commodity contract, the greater is its price swings. There may be normally greater volatility in thinly traded commodity contracts than in actively traded commodities contracts. As a result of volatility, your order may only be partially executed or not executed at all, or the price at which your order may be substantially different from the last traded price or change substantially thereafter, resulting in real losses. (ii) Risk of Lower Liquidity Liquidity refers to the ability of market participants to buy and/ or sell commodity contracts expeditiously at a competitive price and with minimal price difference. Generally, it is assumed that the more the number of orders available in a market, the greater is the liquidity. Liquidity is important because with greater liquidity, it is easier for investors to buy and/ or sell commodity contracts swiftly and with minimal price difference and as a result, investors are more likely to pay or receive a competitive price for commodity contracts purchased or sold. There may be a risk of lower liquidity in some commodity contracts as compared to active commodity derivative contracts. As a result, your order may only be partially executed, or may be executed with relatively greater price difference or may not be executed at all. Buying/ Selling without intention of giving and/ or taking delivery of certain commodities may also result into losses, because in such a situation, commodity contracts may have to be squared-off at a low/ high prices, compared to the expected price levels, so as not to have any obligation to deliver/ receive such commodities. (iii) Risk of Wider Spreads Spread refers to the difference in best buy price and best sell price. It represents the differential between the price of buying a commodity contract and immediately selling it or vice versa. Lower liquidity and higher volatility may result in wider than normal spreads for less liquid or illiquid commodity s contracts. This in turn will hamper better price formation. (iv) Risk-reducing orders Most of the Exchanges have a facility for investors to place “limit orders”, “stop loss orders” etc. Placing of such orders (e.g. “stop loss” orders or “limit” orders) which are intended to limit losses to certain amounts may not be effective many a time because rapid movement in market conditions may make it impossible to execute such orders. A “market” order will be executed promptly, subject to availability of orders on opposite side, without regard to price and that while the customer may receive a prompt execution of a “market” order, the execution may be at available prices of outstanding orders, which satisfy the order quantity, on price time priority. It may be understood that these prices may be significantly different from the last traded price or the best price in that commodity contract. A “limit” order will be executed only at the “limit” price specified for the order or a better price. However, while the client received price protection, there is a possibility that the order may not be executed at all. A stop loss order is generally placed "away" from the current price of a commodity contract, 76 G.N. No. 146 (contd.) Commodity Exchanges and such order gets activated if and when the contract reaches, or trades through, the stop price. Sell stop orders are entered ordinarily below the current price, and buy stop orders are entered ordinarily above the current price. When the contract approaches pre-determined price, or trades through such price, the stop loss order converts to a market/limit order and is executed at the limit or better. There is no assurance therefore that the limit order will be executable since a contract might penetrate the pre-determined price, in which case, the risk of such order not getting executed arises, just as with a regular limit order. (v) Risk of News Announcements Traders/Manufacturers make news announcements that may impact the price of the commodity contracts. These announcements may occur during trading and when combined with lower liquidity and higher volatility may suddenly cause an unexpected positive or negative movement in the price of the commodity contracts. (vi) Risk of Rumours Rumours about the price of a commodity at times float in themarket through word of mouth, newspaper, websites or news agencies, etc., the investors should be wary of and should desist from acting on rumours. (vii) System Risk High volume trading will frequently occur at the market openingand before market close. Such high volumes may also occur at any point in the day. These may cause delays in order execution or confirmation. During periods of volatility, on account of market participants continuously modifying their order quantity or prices or placing fresh orders, there may be delays in execution of order and its confirmation. Under certain market conditions, it may be difficult or impossible to liquidate a position in the market at a reasonable price or at all, when there are no outstanding orders either on the buy side or the sell side, or if trading is halted in a commodity due to any action on account of unusual trading activity or price hitting higher side or for any other reason. (viii)System/ Network Congestion Trading on the Exchange is in electronic mode, based on satellite/ leased line communications, combination of technologies and computer systems to place and route orders. Thus, there exists a possibility of communication failure or system problems or slow or delayed response from system or trading halt, or any such other problem/glitch whereby not being able to establish access to the trading system/network, which may be beyond the control of and may result in delay in processing or not processing buy or sell orders either in part or in full. You are cautioned to note that although these problems may be temporary in nature, but when you have outstanding open positions or unexecuted orders, these represent a risk because of your obligations to settle all executed transactions.
