Futures Contract Specifications for Certified Emission Reduction Units (CERs)

Certified Emission Reduction (CER) – Carbon Credits

CERNCDEX

NCDEX Trading System

Mumbai (NCDEX) - Exclusive of all Taxes, Levies and Duties

One lot of 500 CERs (Carbon Credits)

One lot of 500 CERs (carbon Credits)

Rs. per CER

Rs. 0.20

Certified Emission Reduction (CERs) is a unit pursuant to Article 12 and requirements there under, as well as the relevant provisions in the CDM modalities and procedures and is equal to one metric tonne of carbon dioxide equivalent, calculated using global warming potentials defined by decision 2/CP.3 or as subsequently revised in accordance with Article 5 of the Kyoto Protocol or its successor agreements or decisions under United Nations Framework Convention on Climate Change.

Up to +/- 250 CERs

At notified delivery centre at MUMBAI

As per directions of the Forward Markets Commission from time to time. Currently,

Mondays through Fridays: 10:00 a.m. to 11:30 p.m.
10:00 a.m. to 11:55 p.m. (during US day light saving period)

Saturdays: 10:00 a.m. to 2:00 p.m.
The Exchange may vary the above timing with due notice

As per launch calendar

All open positions for which delivery intentions have not been received or for which delivery intentions have been rendered but remain unmatched for want of counterparty to settle delivery, will be cash settled at Final Settlement Price.

Base daily price fluctuation limit is (+/-)4%. If the trade hits the prescribed base daily price limit, the limit will be relaxed up to (+/-)6% without any break/ cooling off period in the trade. In case the daily price limit of (+/-)6% is also breached, then after a cooling off period of 15 minutes, the daily price limit will be further relaxed up to (+/-) 9%. Trade will be allowed during the cooling off period within the price band of (+/-)6%. In case of price movement in International markets which is more than the maximum daily price limit (currently 9%), the same may be further relaxed in steps of 3% with the approval of FMC.

Member level limit: 66000 lots or 15% of market wide open position which ever is higher
Client: overall 11000 lots
The above limits will not apply to bona fide hedgers.

6%

In case of additional volatility, a special margin at such other percentage, as deemed fit, will be imposed in respect of outstanding positions, which will remain in force as long as the volatility exists, after which the special margin may be relaxed.

10th day of the delivery month.

If 10th day happens to be a Saturday, Sunday or Holiday, then the due date shall be the immediately preceding trading day of the Exchange

Both options

Buyer Clearing Members with open long position may seek any specific additional requirement/information from Seller Clearing Member though the Exchange system. Any such request for additional information will be considered at the discretion of the Exchange and any information made available by the seller can be conveyed to all the Clearing Members with open long position subject to any terms and condition that may be imposed by the Exchange.

The delivery intention can be given during three business days (excluding Saturday) from fifth business day to third business day prior to the expiry of the contract. The Clearing Member with short open position can give their intention to deliver CERs along with the "compulsory requirement / information from seller". Seller may also submit additional information as sought by the Buyer Clearing Members through Exchange system. Seller Clearing Member can also submit any special terms and conditions of sale of CER as may be permitted by the Exchange on the Exchange trading system.

The Buyer Clearing Member with the long open position can give their intention to take delivery and record their rejection of projects which they do not intent to consider for buying CERs.

The Exchange will match the intention of the buyers and sellers and will allocate CERs for delivery. The actual delivery will be effected to the extent of matched quantity and unmatched quantities will be closed out at the Final Settlement Price at the expiry of the contract.

If the Expiry Date is E then, Pay-in and Pay-out for unmatched intentions would happen on E+1 day. If such a E+1 day happens to be a Saturday, a Sunday or a holiday at the Exchange, clearing Banks, Pay-in would be effected on the next working day.

The seller and the buyer Clearing Members will submit required documents and complete "Post Expiry Formalities" as laid down by the Exchange. The Pay-in from the buyer, Payout to Sellers and transfer of CERs to Buyers will happen for those CERs where the formalities are completed, on Fifth Business day (excluding Saturday, Sunday or a holiday at the Exchange, Clearing Banks) after expiry of the contract. The failure of the Seller or Buyer to complete the formalities will be considered as “failure to meet delivery obligations” and the defaulter(s) will be liable to pay penalty as specified by the Exchange. The decision of the Exchange will be final and binding on both Buyer and Seller Clearing Member and their clients as the case may be.

Schedule for pay-in and pay-out will be declared by the Exchange from time to time.

The penalty structure for failure to meet delivery obligations will be as per Circular no. NCDEX/TRADING-091/2007/235 dated October 4, 2007 The Exchange will have right to change the penalty structure.

The Exchange reserves the right to change the delivery procedure in the interest of the market participants after approval of the Forward Markets Commission.

The Exchange proposes to do price polling for the guaranteed deliverable CERs for the corresponding contract expiry date from the national and international sources to decide the Final Settlement Price. International polled prices will be converted into India Rupee equivalent on the basis of Exchange rate as notified by the Reserve Bank of India on that particular day