Clearing Member (CM) is the registered institution with financial requirements as prescribed by the Exchange which does the clearing and settlement of all the trades of their respective clients along with other administrative works like providing margin leverage, customizing transactional fees, client registration, introducing brokers/sub-brokers, margin call updates, offline support etc. They earn mainly from the transactional fees from their clients and can charge customizable commissions to their clients based on the market competition and services they provide. They also act as a Market Maker while clearing the given trades which means they can enjoy multiple benefits than any other entity. They can appoint other Market Makers, Brokers, Sub-Brokers as well. However, Market Makers are required to have an agreement with the Exchange, fulfilling the prerequisites.

a) Norms for Clearing Member (CM)

• Should be a firm duly incorporated under the Law of Land, whose objectives in the MOA and/or its constitution permits such institution to involve in commodity market. If the firm is domiciled outside Nepal, it shall also require the necessary permission from the Government of Nepal to carry out its business activities in Nepal
• Shall be able to procure a wide range of Brokers and Clients.
• Should have adequate knowledge of commodity market and have good experience simultaneously having knowledge of national and international market trends.
• Should Comply with Capital & Technical requirements as prescribed by the Exchange.
• Shall have the capacity to quote orders and also clear their customer's trades.
• Should possess the minimum Net worth as prescribed by the Exchange
• Should have the necessary infrastructure to efficiently and effectively discharge its clearing and trading activities
• Should agree to abide by all Exchange Rules and to cooperate in their enforcement.
• Shall agree to guarantee and assume complete responsibility for trades executed through it.
• Should not have any cases against financial crimes or fraud in any court in Nepal.

b) Document Required

• Application form along with photos of Authorized Persons
• Bio data of directors, Partners or Authorized representatives along with photos
• Letter of undertaking
• Financial Credibility Certificate (FCC) letter provided by Bank on current account
• Proof of identity- copy of citizenship/passport/driving license.(self certified)
• Proof of address-utility bill/bank statement (self certified)
• Copy of MOA & AOA
• Copy of latest filed income tax return if the company is registered for more than one year
• Resolution Authorizing the Institution to Apply for Clearing Membership, Execution of MEX-CM Agreement, Authorized Signatory & to open Bank Accounts
• Letter Authorizing the Authorized Person
• Copy of PAN/VAT Certificate copy (self certified)
• Copy of Net worth certificate Rs 1.5 crore (certified by registered auditor)
• Copy of Company Registration Certificate (self certified)
• Specimen of Signature and Seal

c) Benefits

• Transactional Fee: Each client and MM trading under a particular CM pays transactional fee to their respective CM and they can also customize the commission chargeable.
• Empowered Status: CM in new module has highly empowered role and distinct status with the availability of valuable authorities like customizing the margin, registering clients & brokers, grievance handling responsibilities, view access, accounts maintenance, trade surveillance etc.
• Admission and Renewal Fee: CM can charge competitive Admission and Renewal fees to its broker and sub-broker which can be a source of revenue for CM.
• Market Maker's benefits: As CM acts as a MM too, all the benefits of MM will be their benefits too.
• Networking: CM can expand their networks all over the country by registering the endless number of Brokers and Clients and they can also target the existing members of the industry.
• Software: Customized software to access the MEX Nepal automated trading platform is provided to the CM by the designated software vendor .

Market Maker is an institution registered with the Exchange who quotes Bid and Ask prices for various contracts simultaneously by which the market depth is created and the best prices are generated to execute the orders initiated by the clients. They also trade for profit making but their orders get executed and matched when there quotes are available for Best ASK/BID and if any client takes market order or any other market makers close their open positions or clients' limit/stop orders reach to the level of Best ASK/BID price. However they also can close their open position any time during the trading session.

a) Norms for Market Maker (MM)

• Whose objectives in the MOA/AOA and its constitution permits the institution to involve in financial and futures markets
• Who possess the minimum net worth prescribed by the Exchange
• Has the necessary infrastructure to effectively discharge its market making activities
• Must comply with the financial and other requirements as prescribe.
• If institution is domiciled outside Nepal, it shall also require the necessary permission from the Government of Nepal to carry out its business activities in Nepal.
• Should have the capacity to quote both buy and sell price for an instrument.
• Should agree to abide by all Exchange Rules and to cooperate in their enforcement.
• Should not have any cases against financial crimes or fraud in any court in Nepal.

b) Document Required

• Application form along with photo of Authorized Person
• Bio data of directors, Partners or Authorized representatives along with photos
• Letter of undertaking
• Financial Credibility Certificate (FCC) letter provided by Bank on current account
• Proof of identity- copy of citizenship/passport/driving license.(self certified)
• Proof of address-utility bill/bank statement (self certified)
• Copy of MOA & AOA
• Copy of latest filed income tax return if the company is registered for more than one year
• Resolution Authorizing the Institution to Apply for Market Maker Membership, Execution of MEX-MM Agreement & Authorized Signatory
• Letter Authorizing the Authorized Person
• Copy of PAN/VAT Certificate copy (self certified)
• Copy of Net worth certificate of Rs 1 crore (certified by registered auditor)
• Copy of Company Registration Certificate (self certified)
• Specimen of Signature and Seal

c) Benefits

• Market making benefits: Market Makers can benefit largely from competitive selection of quotes as well as proper risk management techniques. They can profit by doing Market Making for positions of other market makers and clients available in the market.
• Spread Benefit: Market Makers are allowed to use given range of spread to quote the prices, which results in good spread benefit if orders are executed at their price and can settle any of their open position quite often and when required.
• Competitive advantage: The more competitive prices MM quote more are the chances of getting their orders executed. They can deal with the huge number of trading crowd under Price-Time Priority principle.
• No need of Marketing: MM can flow the quotes for all the traders without any concern to which Clearing Member they belong to. Moreover, CMs along with the brokers will be responsible for the overall marketing and expanding client base.
• Greater Liquidity: Frequent quotes, trades, execution and settlement provide greater liquidity in the market.
• Transparency leading to greater credibility: Under this model, all quotes are flown to the market and cleared & settled by the market itself which leads to complete transparency in trade. Because of competitive nature of order matching mechanism, clients will be getting the actual or closest quotes to trade and moreover they can also view the entire market depth too.
• Margin Release facilities: As MMs are quoting bid and ask prices simultaneously; in case of execution of both buy and sell quotes, the initial margin goes free for the particular quantities which allows MMs to increase their trade lots.
• Risk Transfer among MMs: As there will be many market makers in the trade; one MM can even transfer his open positions to other MMs by closing its open positions for the risk mitigation. In the absence of any MM to take the transferred position, Clearing House will take the ultimate liability.

Broker is an institution licensed by Clearing Member in accordance with criteria prescribed by the Exchange who have right to introduce Sub-Brokers and Clients. They act as a market facilitator to traders, providing advisory services, keeping their sub-brokers and clients updated and informed about any concerns regarding trading opportunities, handling grievances, thereby, ultimately bridging clients with Clearing Member and Exchange.

a) Norms for Broker

• Should be an Institution
  • Whose objective in the MOA and its constitution permits the institution to involve in financial and futures markets.
  • Should be a Stock Exchange broker or any other Commodity Exchange Brokers.
  • Has necessary infrastructure to effectively discharge the responsibilities of a broker
  • If institution is domiciled outside Nepal, it shall also require the necessary permission from the Government of Nepal to carry out its business activities in Nepal.
• Broker should not have any cases against financial crimes or fraud in any court in Nepal.
• Broker shall have the flexibility to have Brokership with more than one Clearing Member.

b) Documents Required

• Application form along with photo of Authorized Person
• Bio data of directors, Partners or Authorized representatives along with photos
• Letter of undertaking
• Financial Credibility Certificate (FCC) letter provided by Bank on current account
• Proof of identity- copy of citizenship/passport/driving license.(self certified)
• Proof of address-utility bill/bank statement (self certified)
• Proof of Bank Account Number of any of the MEX designated banks
• Memorandum of Association & Article of Association
• Copy of latest filed income tax return if the company is registered for more than one year
• Resolution Authorizing the Institution to Apply for Brokership, Execution of CM-Broker Agreement & Authorized Signatory
• Letter Authorizing the Authorized Person
• PAN/VAT Certificate- self certified
• Company Registration Certificate- self certified
  • Specimen of Signature and Seal
  • Registration Form for Exchange

c) Benefits

• Introduce Clients & Sub-brokers and get maximum commission from the trades done by clients
• Have support from the Exchange and Members for promotions and business expansions
• Expand its business arena by opening branches across the country
• Free trading console for their clients and sub-brokers
• Access client's trade through web admin provided to the brokers
• Online Client Registration system
• 24 hours support available
• Availability of Manager Console to monitor the market and communicate with the clients and sub-brokers through online chat

Sub-broker is an individual or institution who can introduce clients and has right to trade on behalf of them or monitor client's trades. They also act as a bridge between Broker and Client.

a) Norms for Sub Brokers

• Sub Brokers can be
  • An individual aged 21 yrs or above
  • An Institution
• Sub Broker should have trading experience in Futures Market
• Sub Broker should be of good moral character, reputation, integrity
• Sub- Broker shall be allowed to register himself/itself as a client
• Any of the below mentioned criteria to be fulfilled and proof of same to be provided
  • Certificate/ transcript of Bachelors degree
  • Proof of trading experience
  • MCDB certificate
  • AE Examination
• Sub Broker shall get clients account access under its Trading Console only when the client has provided Power of Attorney for trading by the AE in his/its account
• Sub Broker should not have any cases against financial crimes or fraud in any court in Nepal

b) Documents Required

• Individual Sub-broker
  • Sub-Broker/AE Profile
  • Proof of Identity & Proof of Address- self certified
  • Broker-AE or CM-AE Agreement
• Institutional Sub-broker
  • Sub-Broker/AE Profile
  • Broker-AE or CM-AE Agreement
  • Name and Address of Board of Directors & details of Percentage of shares holding
  • Resolution authorizing for application for registration as Sub Broker and the signatory
  • Letter authorizing the person duly signed by all directors
  • Proof of ID and address of the authorized person
  • Company Registration Certificate
  • Memorandum of Association & Article of Association
  • VAT Registration Certificate
  • Proof of Address of Company

c) Benefits

• Act as a business partner of broker and introduce clients through broker
• Can work as an independent individual/ entity and provide services to its clients
• Can negotiate on commission sharing with the Broker
• Can act as trading advisor for their clients as well as can trade on the behalf of the clients as per the rights provided
• Can get support from the broker to get materials for promotion
• Can jointly conduct program with broker for business expansion and promotion
• Can be a self-trader as well

Clients are the actual traders i.e. speculators, hedgers or arbitrageurs, trading for risk mitigation arising from price volatility or profit-making from price volatility itself.

a) Norms for Clients

• For Normal Products [Futures & Spot]

• Clients can be
  • An individual aged 18 yrs or above [Individual a/c]
  • Two Individuals having joint bank account [Joint Client a/c]
  • Institution [corporate clients]
• A client is allowed to register himself as a Sub Broker/AE

• For Product/s with Delivery Logic

• For 10 gram Gold, 1000 grams Silver, 1 KG Silver, Egg Large & Egg Medium
  • Clients can be an Individual or an Institution
  • For Gold, client needs to have their own operational account in any of MEX designated banks. For Silver, client needs to have their own operational account in Century Commercial Bank Ltd. [CCBL], compulsorily. For Egg, client needs to have their own operational account in Bank of Kathmandu Lumbini or eSewa, compulsorily
• For 20 KG Silver
  • Clients can be an Individual having PAN Card or an Institution
  • Client needs to have their own operational account in Century Commercial Bank Ltd. [CCBL], compulsorily. It shall be under the discretion of the bank to approve or reject the client for trading in this product

b) Documents Required

• Individual Client
  • Client Registration Form
  • Broker-Client or CM-Client Agreement
  • Terms & Conditions, if client intends to trade in product/s with delivery logic
  • Proof of Identity
  • Proof of Address
  • Proof of Bank Account Number
  • Self Certified Copy of PAN card[compulsory for trading in 20 KG Delivery Silver]
  • In case of joint bank account, along with other required documents as mentioned above, a letter authorizing one of the clients to receive user and trade is required
• Institutional Client
  • Client Registration Form
  • Broker-Client or CM-Client Agreement
  • Terms & Conditions, if client intends to trade in product/s with delivery logic
  • Name and Address of Board of Directors & details of Percentage of shares holding
  • Resolution authorizing for application for registration as a client and the signatory
  • Letter authorizing the person duly signed by all directors
  • Proof of ID and address of the authorized person
  • Company Registration Certificate
  • Memorandum of Association & Article of Association
  • VAT Registration Certificate
  • Proof of Address of Company
  • Proof of Bank Account Number

c) Benefits

• Can hedge price risk that arises from change in price of commodities in advance thorough standardized futures contract and market
• Can speculate the futures price movements and make money with the help of calculated risk and return analysis
• Have leverage facility i.e. Margin Trading
• 24 hours market with online trading facility
• Individual Trading Platform where clients can login anytime and monitor their trades
• Investments in commodity market offer high liquidity. It is equally easy to both buy and sell and the client can easily liquidate his orders whenever required
• Have facility of ALGO Trading
• Charts and News for analysis purpose is provided free of cost
• Flexibility of Contracts/Instruments in terms of contract size
• Money transactions only through banking system
• Excellent means of portfolio diversification; Fair and Transparent trading
• Can follow the market wherever they go and place their orders through Android, iPhone ad MAC devices