Public RelationsFMC warns members to avoid trade in inactive accounts
The Forward Markets Commission (FMC), the commodity futures markets regulator, has warned exchange members not to accept trade request from clients whose account witnessed no trade since the past six months.
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Terming such account as “inactive”, FMC said that no trade should be executed without prior written permission from the respective clients.
The FMC in a circular on the website of the National Commodity & Derivatives Exchange (NCDEX), defined “inactive” as accounts which have not shown any trade during the last six months.
The circular further said that FMC had observed during inspection of the members of the national exchanges that some of them still have large number of inactive clients and there is a lack of clarity about the re-operating of these accounts.
The regulator reiterated that members should keep a close watch on inactive accounts and should not accept any trade request without specific written request from the client to re-open those accounts along with all required formalities of know your client (KYC).
The regulator, however, clarified that after receipt of written request from client and fulfilment of requirement of KYC, the member may execute his orders with same client code, that is, the client code issued earlier by the member to the concerned client.
If trade took place in such inactive account without following the above procedure, the same would be treated as members’ proprietary trade for all practical purposes, the circular warned.
Such member will be liable for penal action by the Exchange/FMC for any misuse of client Unique Client Code (UCC).
Members of the Exchange are hereby advised to ensure compliance with the above mentioned directions.