REPORTING OF CLIENT MARGIN
Clearing Members and Trading Members are required to collect upfront initial margins from all their Trading Members L constituents.
Clearing members are required to compulsorily report, on a daily basis, details in respect of such margin amount due and collected, from the Trading Members/Constituients clearing and settling through them, with respect to the trades executed and open positions of the Trading Members, which of the clearing members have paid to NSCCL, for the purpose of meeting margin requirements.
Similarly, Trading Members are required to report on a daily basis details in respect of such Margin amount due and collected from the constituents clearing and settling through them, with respect to the trades executed/open positions of the constituents, which the trading members have paid to the Clearing Members and on which the Clearing Members have allowed initial margin limit to the Trading Members.
ACCOUNTING FOR FUTURES
The Institute of Chartered Accountants of India has issued guidance notes on accounting of equity index and equity stock futures and options contracts from the view point of parties who enter into such futures contracts as buyers or sellers. For other parties involved in the trading process, like brokers, trading members, clearing members and clearing corporations, a trade in equity index futures is similar to a trade in say shares and does not pose any peculiar accounting problems. Hence in this section we shall largely focus on accounting treatment of equity index futures in the books of the client. But before we do so, a quick re-look at some of the terms used:
- CLEARING CORPORATION/HOUSE:
Clearing corporation or house means the clearing corporation or house approved by SEBI for clearing and settlement of trades on the derivatives exchange/ segment. All the clearing and settlementfor trades that happen on the NSE’s market is done through NSCCL.
- CLEARING MEMBER:
Clearing member means a member of the clearing corporation and includes all categories of clearing members as may be admitted as such by the clearing corporation to the derivatives segment.
A Client means a person, on whose instructions and, on whose account, the trading member enters into any contract for the purchase or sale of any contract or does any act in relation thereto.
- CONTRACT MONTH:
Contract Month means the month in which the exchange or clearing corporation rules require a contract to be finally settled.
- DAILY SETTLEMENT PRICE:
Daily settlement price is the closing price of the equity index futures contract for the day or such other price as may be decided by the clearing house from time to time.
- DERIVATIVE EXCHANGE/SEGMENT:
Derivative exchange means a an exchange approved by SEBI as a derivative exchange. Derivative segment means segment of an existing exchange approved by SEBI as derivatives segment.
- FINAL SETTLEMENT PRICE:
The final settlement price is the closing price of the equity index futures contract on the last trading day of the contract or such other price as may be specified by the clearing corporation, from time to time.
- LONG POSITION:
Long position in an equity index futures contract means outstanding purchase obligations in respect of the equity index futures contract at any point of time.
- OPEN POSITION:
Open Position means the total number of equity index futures contracts that have not yet been offset and closed by opposite position.
- SETTLEMENT DATE:
Settlement date means the date on which the settlement of outstanding obligations in an equity index futures contract are required to be settled as provided in the ByeLaws of the Derivatives exchange/segment.
- SHORT POSITION:
Short position in an equity index futures contract means outstanding sell obligations in respect of an equity index futures contract at any point of time.
- TRADING MEMBER:
Trading Member means a Member of the Derivatives exchange/segment and registered with SEBI.
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