Also, how do I get to know till when I will be allowed to trade in these contracts on Zerodha’s platform?
MCX has 2 different modes of settlement for its commodity contracts. They are:
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Cash Settlement- These contracts are cash settled on the expiry day at the due date rate declared by the exchange.
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Physical Delivery Settlement- Delivery of the commodity equal to the lot size is given to the buyer(long position) by the seller of the contract from the exchange defined delivery warehouse. Physical delivery settlement can also be of two types:
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Staggered- The exchange can mark any of the open contracts as delivery during the delivery intention period. Even if the contract is closed after your contract is marked as delivery, the delivery obligation will remain.
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Compulsory- All contracts will be compulsorily physically settled by the exchange if the contract is open on the expiry day.
We maintain a list of all MCX contracts with their settlement type in this Google Sheet.
The sheet is regularly updated with the dates until which Zerodha will allow trading in physically settled contracts to avoid physical delivery. Any changes in the settlement mechanism is also updated in the sheet.
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Hello Mohammed,
is there a constant for these commodity settlement cycles. As i can see from the sheet different commodities have different cash settlement dates, like for Gold we would like to cash settle current contracts 5 days ago, for Zinc it would be 3 days and so and so forth. Are these days fixed or change from time to time
I am a little confused here. I hope someone can clarify this doubt.
In an older post on this forum (dating back to 2017), I had read that all commodity futures contracts on Zerodha are cash settled.
And here in this post, it is mentioned that some contracts on MCX are
Compulsorily physically settled by the exchange if the contract is open on the expiry day
In the Google sheet, I see that for (example) GoldGuinea the settlement type is marked as “compulsory physical delivery”.
Does it mean that if one forgets to square-off/exit GoldGuinea position before expiry date, then the trader has to take a compulsory physical delivery?
Or would Zerodha’s Risk Management System automatically close any open position of such contracts before the expiry date to avoid physical settlement?
today someone asked me a question that was confusing.
Lets say in case of MCX-GOLDM-MARCH-FUT, 05MAR2025 Expiry
As per sheet, it says, last date till trading allowed: 26-feb 7:00PM
So if someone has position and does not square-off, what are the implications?
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Does Z forcefully square-off, the help article says “may”
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If sufficient margin is there, does it mean position can be held for few more days?
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if held in settlement/delivery period, does it imply it 100% meant for physical settlement even if squared-off in the market? kindly eloborate "Trading is not allowed "
Thank you
Blockquote 1. Does Z forcefully square-off, the help article says “may”
Yes, We do forcefully square off as we don’t allow physical delivery
Blockquote 2. If sufficient margin is there, does it mean position can be held for few more days?
Though sufficient margin maintained by client we would forcefully squareoff
Blockquote 3. if held in settlement/delivery period, does it imply it 100% meant for physical settlement even if squared-off in the market? kindly eloborate "Trading is not allowed "
When positions are held during tender period, these positions are assigned randomly for physical delivery. however, if no assignment is done during the tender period then it’s a compulsory assignment of physical delivery on the expiry day.
If you are interested in knowing the MCX delivery process check this link
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Does Zerodha provide margin on holdings, and what can the collateral margin be used for?
Commodity futures and options cannot be traded using collateral margins
Trade commodity F&O on MCX and NSE using collateral margin – Z-Connect by Zerodha
which one? after single ledger, should collateral from EQ pledge work for MCX including margin required for options on T-2,T-1 expiry day for MCX options?
what about component like nse derivatives? min 50% cash component?
Commodity futures and shorting options can be traded using collateral margins only in a single ledger facility.
collateral from EQ pledge work for MCX including margin required for options on T-2,T-1 expiry day for MCX options?
Yes, collateral margin works for MCX devolvement margin (T-2,T-1 expiry day for MCX options)
what about component like nse derivatives? min 50% cash component?
It’s same as NSE even for MCX min 50% cash component required
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thanks for clarifying the doubts. Single ledger has certainly eased things up. takes time to reset from the earlier rules.
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I was unable to use sale proceeds from Commodity FNO to buy equity option in single ledger.
What is the meaning of having single ledger ?