Frequently Asked Questions

Commodity Exchange is an organized marketplace, a legal entity that determines and enforces rules and procedures where one can trade in a standardized commodity contracts.

Currently, Commodity Derivatives Trading is enabled only for “Multi commodity Exchange of India Ltd (MCX). MCX has the largest market share in Commodity Derivatives. We are already in the process of extending this facility to trade through other exchanges offering commodity derivatives trading.

Below are the market timings for Commodity Derivatives Trading:

*During US day light Saving (DST)

In India, commodity trading is predominantly done on two exchanges: Multi Commodity Exchange (MCX) and National Commodity & Derivatives Exchange (NCDEX). The following commodities are actively traded in these two Exchanges:

Multi Commodity Exchange (MCX):

• Bullion: Gold and Silver (all variants)

• Metals: Aluminium, Copper, Zinc, Lead, Nickel etc. (all variants)

• Energy: Crude oil, Natural Gas (all variants)

• Agri commodities: Black Pepper, Cardamom, Castor Seed, Cotton, CPO etc.

National Commodity and Derivatives Exchange (NCDEX):

Agri commodities: Pepper, Barley, Chana, Turmeric, Guar Seed, Guar Gum etc.

For a detail list of existing and newly listed commodities with contract specification, please visit www.mcxindia.com and www.ncdex.com

Currently we at HSL are offering trading in Multi Commodity Exchange of India Ltd.

Until 2015, trading on all the commodity exchanges In India was regulated by Forward Markets Commission (FMC). After that, it was merged with the Securities Exchange Board of India (SEBI). Since the merger, it is the securities market regulator SEBI that regulates commodities trading in the country.

In Commodity Derivatives, for a trade one needs to pay only the margin as against the whole value of contract. This upfront deposit is known as Initial Margin. This amount ensures that your account has enough money at all point in time to support the movement in markets. This is mainly done to cover the price movement on a real time basis for an open position.

Tender period refers to the time period just few days before the expiry of the contract. Customer needs to square off or rollover the open position on T-1 day before the tender period to avoid physical delivery of commodity being marked during tender period.

Only contracts which have depth and liquidity will be available for trading. Typically, near (1^st) and middle (2^nd) month contract will be available for trading in most of the underlying contracts.

Mark-to-Market is a process to adjust the value of your contracts taking into account the current market price. It is typically the difference between the day’s market price and the previous day’s closing price viz-a-viz once entry value.

Yes. HSL will inform regarding margin shortfall and mark to market losses through email but exceptionally if the situation so arises then as a risk containment measure, open position(s) can be squared off even without informing the customers.

This is when you practically try to push your delivery. You do so by closing your current Contract and enter in same underlying contract of another month.

There are three ways to settle trades:

1. Delivery of the commodity: Currently at HSL we will not be providing this facility. However going forward we would be enabling same.

1. Cash settlement: This is when one don’t intent to get into the physical delivery of the commodity. A simple financial transaction takes place with a financial obligation.

1. Offsetting contracts: This is the other way of settling without taking physical delivery of the commodity being traded. In this case, one need to create an exact opposite position of the existing position. So if you have a ‘Buy’ or ‘Long’ contract, you have to create a ‘Sell’ or ‘Short’ contract that is due to expire at the same time. This way, you nullify your previous contract. What remains is your profit (or loss).

One can place commodity trades through Call N Trade using our Centralised Dealing Desk, call 022 49360777 (Prefix STD Code) and speak to our trained tele-broking executives to place your order. Other modes of trading would be made available as early as possible.

Any existing HSL customer can avail Commodity Derivatives facility trough a simple one time online registration process. Once the commodity rights are enabled one can use the same login credentials and access commodities platform and place their trades through our available channels.

Yes. For existing HSL customer any of the below mentioned self-attested documents would be required to be uploaded by client.

Refer detailed list on www.hdfcsec.com under Important links>Regulatory Information> Documents Needed for Activation in other exchange / segment. Please attach any one of the above documents duly self-attested.

A declaration on income range would also be required for existing client. In case any new document is required, the same would be communicated to the client.

To open a Commodity Derivatives Account, you need to open a 3-in-1 account first. In case you don’t have an account, you can register your request by clicking here. (Provide hyperlink).

Once 3-in-1 account is opened, you can place online request through a onetime online registration process and within 48 hours the commodity derivatives rights will be enabled.

No. Existing Demat and Bank Account will be linked to Commodity Derivatives Account.

No. NRI’s are so far not allowed to open Commodity Derivatives Account as per regulatory norms.

To trade in Commodity derivatives clients will be levied with Exchange defined margin+Span Margin+ Extreme Loss Margin+ other regulatory margins as required from time to time.

To begin with there will be separate limit for Commodity Derivatives Account from other available products at HSL.

No, Since there is a separate limit for Commodity Derivative Account, one cannot use its equity sales proceeds to trade in Commodity Derivatives and vice versa.

You can send an email to [email protected] with the subject line ‘Commodity Stop <HSL Trading ID>” and your SMS services will be terminated within 48 hours, post appropriate verification. For e.g. Commodity Stop 32090156.

As of now, delivery provision in HSL is not available.

If any Client fails to square off/closeout the positions prior to the day of Exchange charging delivery margin, HDFC Securities will be forced to square off the position in order to avoid Physical delivery of respective contract.