Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Market / Stock-market-news/  FMC levies penalty on members for not collecting margin money
BackBack

FMC levies penalty on members for not collecting margin money

As per new guidelines, a penalty of 5% of the shortfall in margin money would be imposed on members who are repeated defaulters

A screen grab of FMC website.Premium
A screen grab of FMC website.

New Delhi: Commodity markets regulator FMC has decided to levy up to 5% penalty — of the shortfall in the required margin money — on members of the national commodity bourses from 1 April for failing to collect the required amount from clients.

Exchanges have also been asked to put in place a suitable mechanism to enable members report collection of all margins from their clients at the end of each trading day and to report short collection and non-collection on fifth day.

Members, also called brokers, are required to collect the ‘margin money’ from clients, which is later deposited with the exchange. Margin money includes a percentage of the value of commodity that a client is keen to trade.

FMC has issued fresh guidelines as the regulator has noticed several instances of non-collection and short collection of margins by members from their clients during inspection of their books of accounts.

As per new guidelines, a penalty of 5% of the shortfall in margin money would be imposed on members who are repeated defaulters.

One per cent would be levied on each day if members fail to collect the margin money for more than three consecutive days after trading plus two working days (T+2). The same penalty would be imposed from the day one if initial margin is not collected.

The new guidelines will come into force from 1 April.

FMC said members will have to collect upfront initial margins from their clients. They are given time till ‘T+2’ working days to collect margins (except initial margins) from their clients.

Members are required to report to the exchange on T+5 day, the actual short collection/non collection of all margins from clients, it said.

The penalties collected should be credited to the Investor Protection Fund. The exchanges are directed to submit the report on the penalties to the FMC by the 10th day of the following month.

FMC said that incorrect reporting on collection of margin would attract members a penalty of 100% of amount short collected.

There are six national bourses — MCX, NCDEX, NMCE, ICEX, ACE and UCX and 11 regional level bourses in the country.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 19 Mar 2014, 07:14 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App