Institutional clearing member, Financial Management

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Institutional Clearing Member (ICM)

A Financial Institution has to subscribe to at least 100 equity shares of Rs.10,000 each to become an Institutional Clearing Member of COFEI. Besides they have to contribute a minimum of Rs.10,00,000 towards guarantee fund and pay Rs.1,00,000 towards admission fees. COFEI will have two Institutional Clearing Members. An institutional clearing member shall have the right to clear transactions in coffee contracts of ordinary members, trading members, trading-cum-clearing members if such transactions in coffee contracts are executed by a trading member or a trading-cum-clearing member in the trading ring. An ICM can levy clearing fee on different categories of Members up to the ceiling fixed by COFEI on clearing transactions by a Trading-cum-Clearing Member.

A non-member can also trade at the exchange through a Trading/Trading-cum-Clearing Member.

The following tools are adopted by COFEI to contain the risk.

  • By imposing margins on the traders;
  • Daily marking-to-market of all trades;
  • By imposing limits on the net positions of Clearing Members linked to their capital and guarantee fund;
  • By setting daily price limits for trading; and
  • By maintaining sufficient capital including guarantee fund.

 


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