Non-compliance of any provisions of the Rules, Bye-laws and Regulations by any clearing / trading member shall be treated as a violation and shall attract appropriate action under the Rules, Bye-laws and Regulations of the Clearing Corporation, against such clearing / trading member.

Non-fulfilment of settlement obligation

In case there is a failure to honour the settlement obligation by the CM (Clearing Member), the following action shall be followed:

• In case of a settlement shortage of Rs. 5 lakh or more, the trading facility of all trading members and/ or clearing facility of custodial participants clearing through such clearing members may be withdrawn.
• In case of settlement shortage of less than Rs.5lakhs the amount of shortage shall be blocked from the effective deposits of the clearing member to the extent of funds shortage. This may lead to the withdrawal of the trading facility of the clearing member and the associated trading member.
• If the CM is short for an amount of Rs. 2 lakh or more on six or more occasions in the preceding three months, the trading facility of all the trading members and/ or clearing facility of custodial participants clearing through such clearing members may be withdrawn.
• A penalty of 0.07% per day shall be levied on the amount of the shortage in case of overnight settlement shortage.

Short-collection/Non-collection of client margins

Short collection for each member Penalty percentage (< Rs 1 lakh) And (< 10% of applicable margin) 0.5% (≥ Rs 1 lakh) Or (≥ 10% of applicable margin) 1.0%

The ‘margins’ for the purpose of penalty calculation as stipulated above shall mean:

• Derivatives Segments includes initial margin, exposure margin/extreme loss margin, calendar spread margin and mark to market settlements, or any other margin as specified by the Exchange/Clearing Corporation to be collected by Clearing Members from their clients (i.e. Custodial Participants and Trading Members -for their proprietary positions) and by Trading Members from their clients
• If short/non-collection of margins for a client continues for more than 3 consecutive days, then penalty of 5% of the shortfall amount shall be levied for each day of continued shortfall beyond the 3rd day of shortfall.
• If short/non-collection of margins for a client takes place for more than 5 days in a month, then a penalty of 5% of the shortfall amount shall be levied for each day, during the month, beyond the 5th day of shortfall.
• All instances of non-reporting shall amount to 100% short collection and the penalty as applicable shall be charged on these instances in respect of short collection.
• If during inspection it is found that a member has reported falsely the margin collected from clients, the member shall be penalized 100% of the falsely reported amount along with suspension of trading for 1 day in that segment.
• The client margins (initial margin, extreme loss margin, calendar spread margin and mark to market settlements) are to be compulsorily collected and reported by the members.
• Members who do not collect margins from their clients shall be imposed stringent penalties. Also, regular inspections are conducted to ensure margin collection from clients.
• Information for penalty levied shall be disseminated to the members on daily basis for T-5 margin reporting. Collection of the same shall be on a monthly basis.

Non-fulfilment of Capital Cushion requirement

Non-fulfilment of capital cushion requirements by the scheduled date shall be treated as violation. The penalty as applicable for violation of non-fulfilment of settlement obligation or such other penalty as specified by the Clearing Corporation from time to time shall be levied.

• At the end of each calendar month, members who have exceeded 90% of utilization of capital/limits during the day for more than 7 days in the current month shall be identified.
• The capital requirement to bring the utilisation to a level of 85% at the time of violating the trigger point of 90% on each of those occassions shall be noted for the members. The highest of such amounts for the identified members during the month shall be called for as additional capital.
• The requirement shall be communicated to members on the first day of the subsequent month.
• The members shall be provided a time limit of three working days to provide the amount of additional capital in the form of Cash, FDRs and Bank Guarantees only.
• The additional capital so collected shall be retained with the Clearing Corporation for a period of one calendar month.
• No benefit including exposure, margin etc shall be available to the member on the amount of additional capital so collected.
• In case of non- payment of additional capital within the stipulated time limit a penalty as applicable for funds shortage shall be levied for the period of default.
• In case a member is liable to provide additional capital in the subsequent month, the amount of additional capital shall be recomputed and the excess /deficit shall be refunded /called for.

Penalty norms for violation of trading limits (assigned by clearing members to trading members)

Penalty for margin / limit violation shall be levied on a monthly basis based on slabs as mentioned below or such other amount as specified by the Clearing Corporation from time to time.Penalty for margin / limit violation shall be levied on a monthly basis based on slabs as mentioned below or such other amount as specified by the Clearing Corporation from time to time.

Instances of Disablement Penalty to be levied 1st instance 0.07% per day 2nd to 5th instance of disablement Trading limit violation upto Rs.1 crore = 0.07% per day + Rs.1,000/- per instance from 2nd to 5 th instance. Trading limit violation above Rs. 1 crore = 0.07% per day + Rs.5,000/- per instance from 2nd to 5th instance 6th to 10th instance of disablement Trading limit violation upto Rs. 1 Crore = 0.07% per day + Rs. 4,000/- (for 2nd to 5th instance) + Rs.2,000/- per instance from 6th to 10th instance. Trading limit violation above Rs. 1 Crore = 0.07% per day + Rs.20,000/- ( for 2nd to 5th instance) + Rs.10000/- per from 6th to 10th instance. 11th instance onwards Trading limit violation upto Rs. 1 Crore = 0.07% per day + Rs.24,000/- (for 2nd to 10th instance) + Rs.2,000/- per instance from 11th instance onwards Additionally, the member will be referred to the Disciplinary Action Committee for Suitable action. Trading limit violation above Rs. 1 Crore = 0.07% per day + Rs.70,000/- ( for 2nd to 10th instance) + Rs.10,000/- per instance from 11th instance onwards. Additionally , the member will be referred to the Disciplinary Action Committee for suitable action.

The instances as mentioned above refer to all instances of violations of trading limits during trading hours in a calendar month.