Rights and Obligations of Members and Clients

Right to Trade – Every registered member has the statutory right to execute commodity derivative contracts on the exchange, provided the member complies with the eligibility criteria and maintains the required net‑worth and margin.

Right to Access Market Information – Members may obtain real‑time market data, order‑book details, and price‑dissemination services from the exchange, which are essential for informed order placement and risk management.

Right to Seek Redress – If a client or another member breaches the agreement, the aggrieved member can approach the exchange’s grievance redressal mechanism or SEBI for arbitration. This right safeguards the member’s commercial interests.

• Access to clearing and settlement facilities.
• Participation in exchange‑wide risk‑monitoring programmes.

Members must maintain the minimum net‑worth prescribed by SEBI (currently ₹5 crore for commodity brokers) and must replenish margins promptly to avoid position liquidations.

They are required to implement robust KYC, AML and client‑on‑boarding procedures, ensuring that every client’s identity and risk profile are verified before order acceptance.

Members must submit daily position reports, margin statements, and compliance returns to the exchange and SEBI within stipulated timelines. Failure attracts penalties, suspension or cancellation of registration.

• Maintain a risk‑management framework approved by the exchange.
• Provide transparent fee disclosures to clients.

Clients have the right to receive fair and transparent information about contract specifications, margin requirements, and charges before placing any order.

They are entitled to a prompt execution of orders at the best available price, subject to market conditions, and to receive trade confirmations within the exchange‑mandated time‑frame.

Clients can lodge complaints with the exchange’s grievance cell and, if unsatisfied, approach SEBI’s Investor Protection Fund for compensation under the stipulated guidelines.

• Right to withdraw or modify pending orders before execution.
• Right to a periodic statement of positions and margins.

Clients must furnish accurate KYC documents and keep them updated. Inaccurate information can lead to order rejection or regulatory action.

They are obligated to maintain sufficient funds or margin in their trading account to cover open positions, as per the margin policy communicated by the member.

Clients must comply with position limits, reporting obligations for large positions, and must not engage in market manipulation, insider trading, or any activity that contravenes SEBI’s Commodity Derivatives Regulations.

• Promptly settle any dues, commissions, or penalties.
• Cooperate with member’s audit and compliance checks.

Regulation 12 of the SEBI (Stock Exchanges) Regulations, 2015, outlines the duties of members, including maintenance of net‑worth, adherence to risk‑management norms, and timely reporting of positions.

Regulation 16 prescribes the rights of clients, emphasizing fair treatment, transparent disclosures, and access to grievance redressal mechanisms.

Both regulations stress that rights are exercisable only after the respective obligations are satisfied, a principle frequently tested in scenario‑based questions.

• Regulation 21 – Penalties for non‑compliance.
• Regulation 23 – Investor Protection Fund applicability.

Members must file daily position statements, margin utilization reports, and any breach notices with the exchange’s compliance department. These filings are reviewed by the exchange’s surveillance cell.

Clients receive monthly statements summarising their positions, margins, and fees. Any discrepancy must be reported within 15 days, else the client may lose the right to claim compensation.

Both parties are subject to periodic audits by SEBI-appointed auditors. Non‑cooperation can lead to suspension of trading privileges.

• Timely filing avoids monetary penalties.
• Accurate reporting builds trust and reduces dispute risk.

SEBI’s Investor Protection Fund (IPF) provides compensation up to ₹5 lakh per investor for losses arising from member default, provided the client has complied with all obligations.

The exchange must maintain a separate escrow account to fund the IPF, and members contribute a fixed percentage of their turnover to this pool.

Clients should verify that their member is a SEBI‑registered broker and that the member’s compliance record is clean, as this directly impacts the effectiveness of the protection measures.

• IPF claims must be filed within 30 days of the default event.
• Documentation of KYC, margin statements, and trade confirmations is essential for claim success.