SUGAR
PMEX Sugar Futures Contract Specifications

Trading hours

Hours of Trading in the PMEX Sugar Futures Contract shall be Monday to Friday (excluding Exchange specified holidays) as given below or as Specified by the Exchange from time to time:

 

Normal Trading Session

10 am to 7 pm PST

 

On last trading day contract will be closed at 05:00pm

Unit of Trading

10 Metric Tons

Price Quotation

Price quoted shall be in Rupees per kilogram, Ex- Karachi exclusive of all taxes.

Trading System

PMEX Trading System

Tick size

Rs 0.01

Delivery Unit

10 MT

Quantity Variation

+/- 5%

Quality Specifications

Refined and white sugar of medium grain size as per industry norms.

 
1.
Polarization
99.8 % (Min)
2.
Moisture
0.08 % (Max)
(loss on drying 3 hours at 105° C)
3.
ICUMSA
100 (Max)

Quality Premium

No premium is allowed on higher grades and lower grades are not allowed.

Packaging

Sugar shall be delivered in new 50 Kg Polypropylene woven sacs.

Delivery Centers

At Exchange approved and designated warehouses. The premium, discount or no allowance for each delivery center other than the main delivery centre (i.e, Karachi), will be announced by the Exchange prior to launch of contract and may be subject to change depending on market conditions. Any change will be notified by the Exchange in advance.

Contract Months

Contract months will be notified in advance by the Exchange.

Opening of Contract

Each contract will be open at least one month before its last trading day.

Last Trading Day

Third Wednesday of the contract month or any day specified by the Exchange as a last trading day. If third Wednesday is an Exchange holiday the next working day will be the last trading day.

Daily Settlement Price

The Daily settlement price shall be the consensus price determined during the pre-close session. Exchange can also determine the daily settlement price in the manner described here under or in such other manner as may be prescribed by the Exchange:

 
-
Last Traded Price
-
Value Weighted Average Price
-
 
Theoretical Futures Price based on the spot price obtained from the market sources.
(average of collected prices from the market will formulate the spot price)
 
All open positions will be marked to market at least once a day.

Final Settlement Price

Final settlement price will be the daily settlement price of the last trading day of the contract or as determined by the Exchange.

Price Fluctuation

+/- 5% or as specified by the Exchange.

Settlement Mode

All open positions after the close of contract shall be settled by either of the following modes:

Delivery of sugar at the Exchange approved warehouse and in such quality and quantity as specified in the Contract Specifications.

Delivery through tendering Ex-Sugar Mill Delivery Order from an Exchange approved list of sugar mills.

Mutual settlement of the matched buyer and the seller off the exchange platform.

Failure to fulfill delivery obligations shall be liable to closing at the final settlement price fixed together with a fine as determined by the Exchange.

Notice Period

Sellers with open short positions and intending to deliver will be required to inform the exchange two trading days prior to the last trading day (E-2, where E refers to the expiration day) or latest by the closing time of the contract of their intention to deliver along with the quantity which will be delivered and the expected delivery center from the Exchange approved list.

The corresponding Buyers with open long positions matched randomly by the Exchange after the expiration of the contract with the Sellers will be bound to settle by taking physical delivery. Exchange may seek buyers’ preference of delivery centre while matching the buyer and seller for delivery.

The names of the matched buyers and sellers would be communicated to respective members on E+1.

Any failure to deliver by the Seller or taking delivery by the matched Buyers will result in a penalty determined by the Exchange.

Delivery Mode &
Delivery Period

Upon Expiration of the contract the seller with open position will have three business days (E+3) to deliver the Sugar at the Exchange approved and designated warehouse after completing all Exchange specified procedures for delivery including the quality and quantity certification.

The Delivery can also be made through an Ex-Sugar Mill Delivery Order (DO) of any sugar Mill from a panel of sugar Mills approved by the Exchange. The Seller needs to submit the DO in the name of matched buyer to the Exchange latest by E+3.The DO should be valid for at least seven (E+7) working days from the expiry of the contract.

The DO should be unconditional and should meet the quality, quantity and packaging specifications as per contract specifications and the loading of the bags to the truck arranged by the buyer.

The DO should be in the name of the matched buyer as communicated by the Exchange to the seller or his broker. The DO should also indicate that this DO is for the fulfillment of Delivery obligation of PMEX Sugar futures contract. PMEX will stamp it and two officers will sign the DO before handing it over to the buyer for authentication purpose.

Exchange has no responsibility whatsoever in case of loss or misuse of DO once delivered to the buyer.

If DO is not honored by the Mill it would be considered as a default by the seller and would be subject to penal charges determined by the Exchange. The buyer has to report for any such event latest by E+8 till 1pm.

Settlement of
Delivery Outside the
Exchange

Matched Buyers and Seller can mutually agree on Off- Exchange settlement of the delivery. In such a case they need to inform the Exchange within the delivery period. The Exchange will then settle their accounts as per final settlement price.

Pay-in and Pay-out
of Funds for Final
Settlement

Final payments will include Final Settlement price plus all applicable taxes as per spot market practices applicable at the time of delivery.

The Buyer should pay funds in full to the Exchange by E+2, after which the Buyer will be eligible to receive the documents to get the delivery from the Exchange approved warehouse or through the ex-mill DO. The seller will be eligible to receive the funds on E+3, once he has delivered the sugar at the Exchange approved warehouse after completing all delivery obligations.

If the delivery is made through a DO, the funds will be paid to the Seller after E+7. However if any problem is reported to the Exchange in getting the delivery from the Mill through DO the
funds would be withheld till the settlement of the dispute.

Quality Certification

If Sugar is delivered at an Exchange approved and designated warehouse, the seller needs to obtain a quality certificate from an Exchange approved analyzer.

In case of delivery through an Ex Mill DO the seller has to provide a certification from the Mill that the sugar delivered under the DO would meet the quality certification as per contract specification.

The buyer has a right to raise objection on the quality of sugar before lifting from the Mill within the delivery period. In such a case, buyer has to arrange a quality certification from the Exchange approved analyzer. The seller shall fully assist in the certification process. In case the test report is not in accordance with the contract specifications the seller needs to tender the sugar again and also pay the certification charges. At this stage, the buyer may opt for cash settlement at a price higher of the final settlement price or spot price at the time of cash settlement.

Cost of certification,
weighing, storage
and delivery etc.

If Sugar is tendered at an Exchange approved and designated warehouse all charges associated with quality certification, weighing, storage, and Exchange required documentation up to the end of day of delivery will borne by the Seller.

Buyers shall pay all charges including storage charges after the business day following the day of the delivery.

Endorsement of
Delivery Order

Buyer can endorse the DO to a third party with full disclosure to the Exchange. However in such a case if any dispute arises Exchange will not take any responsibility.

Position Limit

Greater of 10% of Open Interest or 2000 Contracts per Broker, gross across all clients and across all maturities. Greater of 5% of Open Interest or 300 Contracts per Client, gross across all maturities

Margin
Requirement

The amount of margin payable by members in respect of their outstanding Sugar futures contracts shall be determined by the Exchange.

Margin shall be calculated on a gross basis on all open positions held in different maturity contracts in the same commodity up to the Client Level. The Exchange may give calendar spread discounts.

Initial Margin

Minimum Initial Margin will be calculated using Value-at-Risk (VaR) methodology intended to cover the largest loss over a 1- day Look Ahead period that can be encountered on 99% of the days (99% Value at Risk) or as specified by the Exchange.

Delivery Margin

Delivery Margin will be imposed in increments of 2% per day (or as specified by the Exchange) on all open positions starting at five days prior to expiration (E-5), such that delivery margin payable on last trading will be 10% (or as specified by the Exchange). Delivery margin shall be in addition to the initial margin.

Special Margin

Exchange reserves the right to impose additional margin due to increased or excessive volatility or due to any other reason Exchange deems appropriate.

Further Regulation

This contract shall be subject, where applicable, to the PMEX General Regulations and all applicable Federal/Provincial laws.