The National Commodity & Derivatives Exchange Ltd (NCDEX) has asked its members to maintain their minimum net worth requirement at Rs50 lakh, failing which the exchange will block an amount based on the size of the shortfall.
The exchange also has threatened to disable the terminals in some cases.
In a circular issued to its members, the exchange said for members holding only NCDEX membership, the minimum net worth requirement shall be Rs50 lakh and for members who have membership of other commodity exchanges as well, the minimum net worth requirement shall be Rs75 lakh.
Members are expected to ensure that the net worth is maintained at the minimum prescribed level on a continuous basis during the tenure of their membership of the exchange, it stated.
The exchange has asked members to submit a fresh net worth certificate from a chartered accountant by 31 August, in cases where the net worth of any member falls below the Rs50 lakh limit.
If such members, whose net worth is below Rs50 lakh, do not submit fresh net worth certificates in support of increase in their net worth to the prescribed level by 31 August, or for members who have submitted a fresh net worth certificate but it is found to be below the prescribed level, the exchange would block an amount, based on the size of deficiency in the minimum net worth of their base capital (BC) or additional base capital (ABC), the exchange said.
The blocked amount would not be counted for margin purposes and no exposure limit would be available against the blocked amount, the exchange clarified.
In case of members whose net worth has fallen to zero or has become negative, the exchange would block an amount of Rs15 lakh of their BC or ABC immediately.
Such members would have to improve their net worth and report to the exchange within three months of the date of notice regarding blocking of their BC or ABC, failing which the trading terminal would be disabled, unless specifically permitted by the exchange, the circular said.
Members who are also members of one or more commodity exchanges, and whose net worth has fallen below the prescribed level of Rs75 lakh but not below Rs50 lakh, shall get two financial years and six months to increase the same to the prescribed level or more.
Such a member must ensure that within six months of the end of two succeeding financial years, their net worth is enhanced to an amount not less than the prescribed minimum net worth, the exchange stated.
These members also would face a similar block of their BC or ABC depending on how much they fall short.