Risk Management System (RMS) Policy
A Risk Management System is integral to an efficient Risk system. We have put in place a exhaustive risk management system, which is constantly upgraded as per the Exchange, SEBI norm and also as per the Market Movement.
The Model of RMS in Enrich Financial soution consists of ENRICH Owned Branches, Franchisee & Sub-brokers-Authorised Person.
All the staff, Branches, Branch Manager, and Sub-broker needs to understand and follow the policy as it is the integral part of company.
RMS Function includes:
•To check capital adequacy for exposure and requirements of the client
•Monitoring of Clients Order, Patterns of Trade, Order rejections, increasing of Exposure/limits.
•Monitoring MTM profit/loss incurred out of trades.
•Benchmarking Margin v/s Exposure of client
•Decision taking with regard to squaring off positions on account of MTM loss or Margin shortfalls or any other reasons that may come across
Risk management in relation to all the trading activities for Clients is handled by RMS & Surveillance Department
Risk Management Policy
Client Name:________________ Client Code:_________________
RM Name & Code:__________________ Branch Code:___________________
||Commodity Derivatives (MCX)
|Intra Day Exposure
< 2000 – 2 Times Limit
2000 to 15000 – 5 Times Limit
> 15000 – 10 Times Limit
||1 Times of Limit Set
|Intra Day Exposure
< 2000 – 2 Times Limit
2000 to 15000 – 5 Times Limit
> 15000 – 10 Times Limit
Ledger Balance + Unclear Fund
Note: No Collateral in the form of securities is acceptable
|Criteria for Position square off
MTM Alert message will start from 35 % percentage of warning and every 5 % percentage incremental message will flash to your platform
Note: Once the MTM loss of the intra-day positions reach 75% of the margin available, the positions should be cleared
From the branch concerned, failing which the positions taken for the intra-day will be cleared off from RMS & Surveillance dept, therein after only ATOM or Fund Transfer is allowed to increase the exposure or limit.
In case client MTM loss reaches to 60-70% at the end of The day, client will have to reduce the position up to the Level of 50% or need to enhance the limit by additional margin.
|Intraday Square off Timing
|Market Opening Timing
Pre-Market opening: 8.45 am
Trading Hours: 09.00 am to 11.30Pm
|Cheque Bounce or Reversed Cheque
1 Time instance - The position will be liquidated up to the shortfall amount and no further position will be Granted.
2 Instance - Trading will be allowed based on clear balance
3 & more - Trading account will be closed and freeze and subsequent reporting will be done to FIU.
|Exposure/Limit on Unclear Cheque
Limits shall not be provided for clients on cheques under clearing in the following conditions:
1. Branch has given the cheque details but the cheque is actually not presented to the bank.
2. Cheque entered in ld but it’s not collected
|Illiquid Agro/Non Agro Products
||Exposure: leverage will not be allowing the Exposure on illiquid Commodity that mean next month or far month contract In Commodity segment AGRO product not entertain for trading in ENRICH
*Any delay payment (after T+2) will attract 21% interest p.a.
*Any penalty by the exchange on transaction will be debited to the respective client.
*In case of Bounce cheque penalty of Rs.120/- will be debited to account
*In case of Commodity Margin shortfall 1% or 5%penalty will be debited in the account
*In case of Regulatory body suspend or client name appear under debarred list
*Any observation like false commitment, fake deposit slip, cheque scanned but not deposited, false receipt of the cheque and or any such instances come to the notice of Risk department; no further exposure shall be given to the client and strict action shall be taken against respective RM/Dealer/BM
|Clarification regarding margin collection by Clients
*Free Balance available on current day (T Day) with client in different segments (MCX/NCDEX) of the Exchange will be consider for margin collection
*MTM profit cannot be considered for taking fresh position in MCX segment on T day.
*Cheque dishonored/reverse or not cleared up to T+3 working days should not be considered for Margin Money.
*Penalty if any occurring out of the short payment will be debited to the respective client’s account after t+5 days
*Provisional Margin shortfall penalty & late payment fees will be block from clear balance when payout
|Market Opening Timing
Pre-Market opening: 9.50 am
Trading Hours: 10.00 am to 11.30Pm
Some of unethical and unpractical practice seen done by client or dealer or BM by the Department, strict action will be taken and the decision will solely by the department. Some are like:
*Client Exchange Volume
* Off market Transfer to Multiple clients and from multiple to single account
* Client Script Concentration
* Illiquid Commodity trading
*Client Purchase/Sale to Income
*Profit loss transfer
|Quarterly / Monthly Settlement
Accounts needs to be settled once every quarter / month as per preference selected by him at the time of Account Opening.
Commodity settlement will be done across all Exchanges and segments
|Single Order Limit
The maximum single order in the Commodity market would be restricted to 10000 Qty or Rs.10000000/- value.
The maximum single order in the Futures market would be restricted to 10000 Qty or Rs.10000000/- value.
(The same may be reviewed and changed from time to time)
Pre-Market opening: 9.50 am
Trading Hours: 10.00 am to 11.30Pm
|Market Opening Timing
*No Family adjustment of ledger or cheque is allowed
*No Third party cheque or collateral securities will be accepted
*No Third party cheque or collateral securities will be accepted
*DD or P.O will not be acceptable only if the same are accompanied by the name of the bank account holder and account number of the bank account debited for the purpose, duly certified by the Bank and certificate on banker’s letter head.
*Positions taken as intraday can be converted to Delivery Product (MIS to NRML) subject to the availability of credit balance or on confirmation of Fund transfer.
*All CO and MIS positions will be automatically squared off at the end of each trading day before 15 mins.
*AMO will be cancelled if the price entered is not match the price in either direction.
*AMO will be cancelled if client do not have sufficient funds
*Positions will be squared off immediately, if a cheque bounces (due to any reason).
*No unlimited access granted on any Client ID, Dealer ID and Branch ID
*Restrictions on Next and Far‐month contract
ENRICH will be not be held responsible for any consequence or loss arising out of above policy, If any, client will have to borne the loss
ENIRCH will have all the rights to change the policy
The above Risk policy is from the desk of Risk management and it is for internal circulation and it is mere a document for communication doesn’t have any Legal stand and binding and it is restricted to the staff /Branch & Sub broker to follow the practice
I / We hereby agree all the terms and condition as mentioned above and also confirm that I/we read the above policy and i/we will abide as mentioned in the policy.
Client Signature and Seal if applicable
* It is for internal circulation and it’s a mere document for internal communication and it’s restricted to staff/Branch and Sub- broker.
Ph: 044-4006 3633,
RMS Policies and Procedures
A.Setting up client’s exposure limits
The Exchange may from time to time fix client exposure limits in the interest of orderly working of the markets. Within that overall ceiling, a client can trade within the exposure limit set from time to time by the Broker for the client.
ENRICH impose new limits urgently on the basis of risk perception, risk profile of the client and other factors considered relevant including but not limited to limits on account of exchange / SEBI directions / limits (such as broker level / market level limits in security specific / volume specific exposures etc.).
Sometimes ENRICH may be unable to inform the client of such variation, reduction or imposition in advance. ENRICH won't be authority for such contrast, reduction or client’s inability cause any order through online trading system on their trading account of any such contrast, reduction or imposition of limits.
In the sole discretion of the Commodity Broker, a client may be allowed to trade beyond exposure limit or the limit may be increased. A client having availed such indulgence shall not be heard to complain about his trades only on this account and shall meet the margin shortfall at the earliest without waiting for reminder. The golden rule is Limit your exposure so as to limit your risk to your means.
1.While computing the available margin following parameter consider-
- *Margin based limit is set on MCX Segment
- *clear credit lying in client's settlement and margin ledger account
- *Any on-line funds transfer or hold quantity through bank entree
- *Margin quantity of open positions (in case of derivatives)
- *Outstation cheques are not entertained. All the cheques that collected against the trading positions would have a valid MICR number.
- *All the cheque dishonor cases were viewed seriously and debit certain amounts in such accounts will be cleared from surveillance dept.
2.Exposure limits shall be only against current month contract as decided by the Enrich Financial soution from time to time.
3.In case of Futures, Clients shall be allowed to trade only up to the applicable client wise position limits set by the Exchanges/Regulators from time to time
B.Setting up Terminal/Branch Level limits
Trading Terminals are allotted to Members by exchanges. These terminals enable members to place, modify and execute orders on behalf of clients. There may be instances where due to punching error unusual orders may be placed at high prices which might lead to execution of unrealistic orders or orders being executed at unrealistic prices. In cases where the order/price of such orders is high, it might lead to huge losses to broker. In order to avoid such a situation, it is imperative that certain limits are prescribed for each terminal allotted to member broker.
We ensure documentation of internal controls on areas like order modification / cancellation, client code changes and post-trade activities are in place and are being updated from time-to-time.
We guarantee observance mechanism for client’s debits / obligations and acceptable assortment procedures.
The following limits shall be defined for each terminal:
C.Order Receipt and Execution
- *Quantity Limit for each order
- *Value Limit for each order
- *User value limit for each user ID
- *User quantity limit for each user ID
- *Branch value limit for each Branch ID
- *Spread Order Quantity and Value Limit (Commodity Segment) Checks in place
- *We have a dedicated Risk monitoring team who monitor the exposure, limit, etc.
- *We have NEST Terminal which has a facility to block the client as well as restrict to use over exposure.
- *Terminals limits will be set up by the Front Office official designated at Corporate Office.
- *Direct terminals will be allotted on exceptional basis only.
- *No user/ branch will be provided unlimited limit.
- *Limits shall be monitored on daily basis, taking following criteria’s: Turnover, Exposure, past trends, Location, Deposit/Collateral.
- *Trading in illiquid commodity shall not be permitted.
All Orders routed through Nest are monitored by our risk department and after their confirmation about client’s financial and margin status order get executed.
The dealers take utmost care while executing the trades of the clients regarding the accuracy of Client Code, Quantity and Price etc. The orders from the clients are promptly executed by the dealers and the oral confirmation of the placement of the orders is immediately provided to the clients. Moreover, only registered clients are allowed to enter the dealing room for placing the orders.
The clients are divided into groups among the dealers and sub brokers at head office level, so that particular dealer can serve a particular group of clients which helps dealer to understand the client investment strategy in a better way & serve them accordingly. The orders are entered instantly by the dealer on the instruction given by the client. On execution of valid order into trade, dealers confirm the trade with the client so as to avoid any future dispute.
At the end of the trading hours, the dealer informs the clients about the execution of the orders placed by the clients. Also a trade confirmation SMS message covering details of all the trades executed is forwarded to client after completion of trading hours on registered Mobile No. of the client.
We have telephonic recording system for receipt of order and maintained the said record in machine and increased the hard disk capacity to store increase data and also transfer the same record in tape and maintained the said tape in safe custody forever.
D.Monitoring of Debit Balances
We have system of monitoring client debit balances on a daily and online basis. We have dedicated resources to monitor the debtors as well as asking for the margin cheque. Clients are followed up by tele- calling, sending SMS and e-mails and remarks are noted for each client.
- *No trade is allowed if debit balance continues for 3 days
- *No fresh trade is allowed unless old dues are recovered.
- *Clients of Sub-brokers and Authorized Persons are handled by them and us both
- *The debits in client’s account are either secured against sub-broker’s deposits or are secured against collaterals.
- *The company has a policy to transfer the securities of the client till the payment in respect thereof is received.
Exchanges follow a settlement schedule of T+1 in Commodity segment, daily MtoM settlement & Final Settlement in Furtures segment.
As per ENRICH policy the customers need to pay the debit balance on the day of purchase itself or on next day. The left out clients’ debit won't be allowed to carry forward happening on the next days. No extension is possible happening on next day in whatever the circumstances. All the debits aging more than 3 days will be cleared from Surveillance dept without further intimation to branches.
E.Client Code Modification:
Trades are done only on the exchange platform and if any trades need to be transfer become of wrong punching code it is done in the exchange platform system. Client code changes were accepted only through an email or written letter prior to post closing session. Client code modification will be done within the time limit given by the respective exchange.
Every request for client code modification is to be sent to RMS dept in the predefined format and proper care should be taken in filling the Exchange order number, trade number, old client code, new client code, and the reasons for wrong Punching.
The reason for the modification is to be analyzed by the risk management department with regards to client’s ledger a/c; trading pattern etc. & if found to be genuine then modification will be approved Modification will be allowed only in delivery trades in which error was occurred genuinely
Penalties & actions taken by the exchange against the broker / member shall be passed on to the respective client & in addition penalties & action shall be taken against the Sub-Broker’s /AP’s / Branches/ Dealers.
F.Margin Collection Procedure
The ENRICH has RMS department at its corporate office situated at #241,85-86, Ziat Court, Rangraja Puram Main Road, Kodambakkam, Chennai - 600024.The ENRICH has a RMS (RISK Management System) Team, who is responsible for setting up the Client wise Trading limits, Margin collection & Reporting procedure as described below:
Client Limits are allowed as per margin norms of the relevant exchanges. Clients are required to provide upfront margin in the form of funds before any trade.
RMS department monitor all orders & trades given by clients and executed in the trading terminal. The departments are also vigilant about all order rejections and spurt in exposures. The ENRICH takes proper and adequate margin from clients as per the exchange/SEBI norms in the form of funds report the same to the exchange as per the guideline of exchange.
We take Margin in the form of Funds through Account Payee Cheque, Electronic Fund Transfer and Securities. We have at most monitoring system which bars the acceptance of third party cheque.
At the end of the day, Shortage of Client margin is calculated and reported to the Exchange. During the trading hours if any short margin observed, RMS team follow internal RMS policy, due diligence and update the status to the respective branch/ SB/AP and to clients. In case client doesn’t respond RMS team Sq-off the open position and subsequently intimate to the client.
Trading limit is set by RMS based on the available margin amount and calculated by considering the trading price prior to trading day (T—1 day) on daily basis. The debit and credit status is email or SMS to client on daily basis. In case of debit balances regular follow-up has been done. The RMS team do monitor the debtors and if client exceeding the exchange norms for the trading is been halt, unless and until the debit is not clear by client.
G.Margin Reporting Procedure:
On a daily basis Exchange provides Margin Files to the Trading member in Commodity Segment.
The ENRICH report details of Initial Margins collected from their clients for Commodity segment
Mechanism for regular reporting of Margin
- *Free Balance available on current day (T Day) with client in MCX segments of the Exchange will be consider for margin collection
- *Cheques dishonored/reverse or not cleared up to T+4 working days should not be considered for Margin Money.
After preparing margin report file, RMS person forward reporting file to person who is authorized to recheck the report file before uploading on exchange.
Status of the file uploaded shall be checked regularly on the day of uploading after a few hours of uploading the same.
Penalty if any occurring out of the short payment will be debited to the respective client’s account after t+5 days Information related to margin applicable, utilized and required / balance in respect of each client is to be sent on a daily basis to the respective clients in both the segments.
- *Client code and name, Trade day (T)
- *Total margin deposit placed by the client up to day T-1 (with break-up in terms of cash, FDRs, BGs and securities)
- *Margin used up to the top of day T-1
- *Margin deposit placed by the consumer on day T (with break-up in terms of money, FDRs, BGs and securities) Margin adjustments for day T
- *Margin standing (balance with the member/due from the client) at the top of day T
Margin Shortfall Penalty
Short-collection/Non-collection of client margins (MCX Segments)
With reference to SEBI circular no. CIR/DNPD/7/2011 dated August 01, 2011, where in it has been stated that “Stock Exchanges shall levy penalty for short collection/ no collection of margins from clients in MCX segments. W.e.f. September 01, 2011. As per the above circular, the penalty applicable to client’s trading account for MCX segment will be as follows w.e.f. September 01, 2011:
|Margin Shortage per day for each Segment
|(< Rs 1 lakh) And (< 10% of applicable margin)
|(≥ Rs 1 lakh) Or (≥ 10% of applicable margin)
1.If short/non-collection of margins for a consumer continues for quite three consecutive days, then penalty of fifty of the deficit quantity shall be levied for every day of continued shortfall beyond the 3rd day of shortfall.
2.If short/non-collection of margins for a shopper takes place for over five days in an exceedingly month, then penalty of fifty of the deficiency quantity shall be levied for each day, throughout the month, on the far side the fifth day of inadequacy.
3.Not withstanding the higher than, if short assortment of margin from shoppers is caused thanks tomovement of three or additional within the index (close to shut price of artifact futures) on a given day, (T day), then, the penalty for short collection shall be imposed only if the shortfall continues beyond T+1 day.
H.Right of Sale of client’s securities or closing the client’s open position without giving notice
1. ENRICH maintains specific banking and depository accounts, informed to the clients from time to time, for handling clients’ funds. The clients shall ensure timely availability of funds in required form and manner, within stipulated time and in the designated bank and depository account(s) for meeting their liabilities and obtaining proper credit thereof. ENRICH does not undertake responsibility for any delay or other consequences arising from payment to any other account or non-receipt in time and manner in the designated account(s).
2. In the event of the shopper failing to take care of / provide applicable margin cash needed to sustain the outstanding market positions of the shopper, the corporate shall be entitled, at its possibility and liberty, to liquidate / shut out all outstanding market positions or any half there of specified the outstanding market positions area unit either zeroed out or reduced to AN extent wherever on the market margin covers the market positions remaining when such determine.
3. Any and every one the losses and also the monetary charges on the mercantilism account of equivalent to liquidation/closing-out are going to be charged to and borne by the shopper. The company shall also have right to close out any intraday positions taken by the client, in above circumstances. Such liquidation/ close out may be without any prior reference or notice to the client.
4. RMS Team may initiate liquidation of commodities in following circumstances:
- *In case of Margin Trades, if the open position is neither square off nor regenerate to Delivery by Client(s) at intervals the stipulated time.
- *In case of Margin Trades, where Mark to Market Loss on the open position has reached the 80% of the margins placed with Enrich Financial soution and the Client(s) have not taken any steps either to refill the margin or cut back the Mark to plug Loss.
- *In all alternative cases wherever the margin placed by the Client(s) falls wanting the need or the bounds given to the Client(s) are broken
- *where the Client(s) have defaulted on their existing obligation/ failed to make payments/deliver to Enrich Financial soution with the stipulated time
- *Extreme volatility in the market in particular mcx segment
- *There are any restrictions imposed by exchange or regulator on the contract
- *The client is undertaking any illegal trading practice or the client is suspected to be indulging in MCX commodities.
- *The client has taken or intends to take new position in a commodity which is in the next or far month contract.
- *There are any unforeseen adverse market conditions or any natural calamity affecting the operation of the market.
- *When margin amount due from the client is not received by T+2 days.
- *When any initial margin available in the client’s account is less than the requirement for SPAN margin or Initial Margin
- *In case of liquidating client position arising from MTM loss, Enrich Financial soution informs client about the MTM loss on trading platform once MTM loss is 35% and every 5% incremental.
- *Once MTM loss crosses 75%-80% Enrich Financial soution would liquate client’s position if client have not paid for loss arising in outstanding open position or have squared off open position.
- *Enrich Financial soution has proper system to maintain all records of communication done with clients and sub brokers/authorized persons.
- *RMS Team can add some of the more criteria based on the circumstances as they may deem fit.
- *Risk Head(s) to decide on the priority of commodity to be square off from commodity of a client. I.e. which scrip is to be liquidated first. Also the Commodity futures in which the futures are to be squared off.
- *All positions squared off by RMS Team must be intimated to the client at the earliest, but not later than the same calendar day, and contract notes be dispatched as per exchange stipulations without any exception.
J. Conditions under which a client may not be allowed to take further position or his existing position may be closed
Enrich Financial soution shall have absolute discretion and authority to limit consumer’s volume of business or to shut any existing position of a client while not giving any previous notice to the client under following conditions:
- *SEBI or Exchange imposing restrictions on further exposures in cases of extreme volatility in the market.
- *Client or the Broker prodigious or touching exposure limits set by the Exchange within the specific artifact.
- *Reasonable doubt as to bonafide of the transaction or identity of the client in the light of the financial status and objectives as disclosed in the KYC form.
- *Reasonable doubt on the dealing being cross trade, circular trade, dishonest observe or connected with valuemanipulation or market rigging.
- *SEBI or different competent authority issuance a debarment order against the shopper from shopping for, merchandising or dealing in securities, unless the order is vacated.
- *The client has taken or intends to take new position in a commodity which is in illiquid contract
- *Due to abnormal rise or fall in the market, the markets are closed.
- *Enrich Financial soution shall also have a right to close existing positions of the clients in the abovementioned circumstances
- *Enrich Financial soution shall not be responsible for any loss incurred and the client shall indemnify Enrich Financial soution in this regard.
K. Temporarily suspending or closing a client’s account based on the client’s request
Any shopper devouring of quickly suspending his or her mercantilism account should offer such request in writing to the management. After management’s approval, further dealing in such client’s account will be blocked. Whenever trade has to be resumed in any suspended client account, a request in writing should be made by the client to the management and the management may ask for updated financial information and other details for reactivating such account. After receiving necessary documents, details, etc. and approval from the management, the client account will be reactivated and transaction will be carried out.
Similarly, any consumer appetent of closing his / her account for good is needed to tell in writing and therefore the call during this regard are taken by the management. After necessary approval from the management, the client code will be deactivated. Only after scrutinizing the compliance requirements and a “no pending queries” confirmation is taken, funds account will be settled.
L. De-registering a client
- *Enrich Financial soution Pvt Ltd. may, at its absolute discretion, decide to deregister a particular client if found that:
- *SEBI or the other regulative body has passed Associate in Nursing order against such shopper, prohibiting or suspending such shopper from collaborating within the artefact market
- *Such client has been indicted by a regulatory body or any government
- *Enforcement agency in case of market manipulation or insider trading or any other case involving violation of any law, rule, regulation, guideline or circular governing Commodity market.
- *On the death / lunacy or other disability of the Client
- *Such clients account has been lying dormant for long time or the client is not traceable
- *If the Client being a partnership firm, if any steps have been taken by the Client and / or its partners for dissolution of the partnership
- *Such consumer has been irregular in fulfilling obligations towards margin or settlement dues
- *Such client has been declared insolvent or any legal proceedings to declare him / her as insolvent have been initiated.
- *Such client has a tainted reputation and any business relationship with such clients is likely to tarnish the reputation of ENRICH or may act as detriment to Enrich Financial soution prospects.