FMC/3/2014/C/32

No.2/2/2012/NCDEXCSSpices/MDII Date2
nd
April,2014
To,
TheChiefComplianceOfficer,
NationalCommodityandDerivativesExchangeLtd.,
AkrutiCorporatePark,1
st
floor,LBSRoad,
KanjurMarg(West), MUMBAI400079.

Subject:ApprovalforfuturestradinginChilliTejaatNCDEX
Sir,

I am directed to refer to your letter no. PG1/FMC 908 dated 5

th
December 2013, letter
no.PG1/FMC1017 dated 6
th
January 2014 and letter no. PG1/FMC1491 dated 28
th
March 2014 on the
subject cited above and to convey in pursuance of Byelaw 4.1 of Chapter 4 of the Byelaws of the
Exchange,theapprovaloftheCommissionforfuturestradinginChilliTejacontractsexpiringinApril2014,
June2014,July2014,August2014,September2014,October2014,November2014andDecember2014
as per the approved Contracts specification, Contract launch Calendar, Direct delivery system enclosed at
AnnexureI,AnnexureIIandAnnexureIIIrespectively.

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Telephone :
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2281 2086
GOVERNMENT OF INDIA
Telegram
Fax
:
:
FORMARCOM-KALBADEVI
2281 2086


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E-mail
Website
:
:
contact.fmc@nic.in
www.fmc.gov.in


FORWARD MARKETS COMMISSION

=| / MINISTRY OF FINANCE
( |=-||=) / (DEPARTMENT OF ECONOMIC AFFAIRS)



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'EVEREST', 3 RD FLOOR



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100, MARINE DRIVE, MUMBAI 400 002.
1. I am to add that trading in the above said contracts shall be subject to Rules, Byelaws and
Regulations and also contract specifications of ChilliTeja as approved by the Commission and also the
directionsissuedbytheCommissionfromtimetotime.

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.

6. TheExchange,beingthefirsttierofregulationshallensure that thereis nounhealthyspeculative

trading in the market, which may result in cornering or artificial rigging up or down the prices by particular
class of members. If trading in the above mentioned deliveries results in excessive/unhealthy speculation,
the Commission will intervene and impose stern measures to deal with the situation and if the situation so
warrants,revokethepermissiongrantedtoanyorallthecontracts.

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.

In case the seller does not mark delivery intention before

expiry of the contract, it would be deemed as sellers default
and positions would get closed out

Upontheexpiryofthecontractalltheoutstandingopenposition
shallresultincompulsorydelivery.
Duedate/Expirydate
Expirydateofthecontract:

20th day of the delivery month. If 20th happens to be a holiday, a

Saturday or a Sunday then the due date shall be the immediately
precedingtradingdayoftheExchange,whichisotherthanaSaturday.

The settlement of contract would be by a staggered system of Payin

andPayoutincludingtheLastPayinandPayoutwhichwouldbethe
FinalSettlementofthecontract.
DeliverySpecification
During the Tender period, if any delivery is tendered by seller, the
corresponding buyer having open position and matched as per
process put in place by the Exchange, shall be bound to settle by
takingphysicaldelivery.
FinalSettlementPrice TheFinalSettlementPrice(FSP)shallbearrivedatbytakingthesimple
averageofthelastpolledspotpricesofthelastthreetradingdaysviz.,
E0(expiryday),E1andE2.Intheeventofthespotpricesforanyone
oftheE1andE2isnotavailable;thespotpriceofE3wouldbeused
forarrivingattheaverage.Incasethespotpricesarenotavailablefor
bothE1andE2,thentheaverageofE0andE3(twodays)wouldbe
taken. If all the three days prices viz., E1, E2 and E3 are not
available,thenonlyonedayspriceviz.,E0willbetakenastheFSP.
No.ofactivecontracts AsperLaunchcalendar
Dailypricefluctuationlimit Daily price limit will be 2%. If the trade hits the prescribed daily price
limit there will be a cooling off period for 15 minutes. Trade will be
allowed during this cooling off period within the price band.
Thereafter, price limit would be extended by another (+/)2%. No
trade would be permitted during the day beyond the price limit (+/)
4%fromthepreviousdaysclosingprice.
Positionlimits Member: Maximum of 12,500 MT for all contracts or 15% of market
openpositionwhicheverishigher
Client:Maximumof2,500MTforallcontracts
Hedge positions as indicated lvide Commissions letter no. 4/4/2005
MCDEX/COMPLdated4/10/2005.
Fornearmonthcontracts:
The following limits would be applicable from 1st of every month in
whichthecontractisduetoexpire.If1
st
happenstobeanontrading
day,thenearmonthlimitswouldstartfromthenexttradingday
Member: Maximum of 4,000 MT or 15% of market wide near month
openpositionwhicheverishigher
Client:Maximumof800MT
Specialmargins Special margin of 5% of the value of the contract will be levied
whenever the rise or fall in price exceeds 20% of the 90day prior
settlementprice.Themarginwillbepayablebythebuyerortheseller
depending on whether price rises or falls respectively. The margins
shall remain in force so long as the price stays beyond the 20% limit
andwillbewithdrawnassoonasthepriceiswithinthe20%band.
MinimumInitialmargin 5%

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.