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Entities in the Trading System
There are a number of entities that exist is the trading system of exchanges such as the NCDEX and MCX. A brief description of each follows:
(i) Trading cum Clearing Member (TCM) :
These individuals are responsible for the activities related to transactions i.e. trading, clearing and settling for both, their own account and as well as their clients’ accounts. The exchanges allots an ID to each TCM and each may possess more than one user. The permitted number of users is determined and modified by the exchange authorities from time to time. Registration with the exchange is compulsory for each TCM in order to attain a unique user ID. The TCM is further responsible for all the users and their accounts operating under him.
(ii) Professional Clearing Member (PCM) :
The professional clearing members are given the responsibility of clearing and settling on all the trades made through the TCMs or other trading members.
(iii) Trading Member (TM):
Trading members only have the authority to conduct trades through the account(s) given to them by the exchange. These accounts can be their own account or accounts of their clients. The clearing and settlement is taken care of by the PCM or the Strategic Trading cum Clearing Member.
(iv) Strategic Trading cum Clearing Member (STCM):
The Strategic Trading cum Clearing Member is a level higher than the TCM. These members can trade on their own account as well as the accounts of their clients. They themselves can clear and settle all their own trades and also clear and settle the trades of other TMs.
