The Square off process in the commodity market refers to the action of closing out an existing position or trade before the end of the trading day. This is done to lock in profit or minimize losses. Here is a list of different square off processes: 

 

Intraday Square Off

·        It is a practice of closing out a trading position within the same trading day.

·        At 04:30 P.M. for Agri Commodities (Market closes at 05:00 P.M.)

·        At 08:30 P.M. or 09:00 P.M. in case of sun-outage for International Agri Commodities (Market closes at 09:00 P.M. or 09:30 P.M. respectively)

·        At 11:00 P.M. or 11:25 P.M. in case of sun-outage for All Other Commodities (Market closes at 11:30 P.M. or 11:55 P.M. respectively)

Auto Square Off System (MTM Based)

• All positions (Intraday & Delivery) are squared off when MTM Loss reaches 50% of the available Net worth.

Margin Squared Off (Shortage)

• Positions without sufficient funds can be squared off at any time at the discretion of the RMS desk.
• There may or may not be margin calls or intimations from the RMS desk.
• Positions are squared off proportionally by the risk team to reduce margin shortfalls.

Physical Delivery

• Commodities with compulsory delivery are closed a day before their delivery intention periods.
• Physical delivery positions are not allowed.
• All MCX deliverable contracts enter "Tender Period positions" as specified by the exchange.
• Client positions are squared off one day prior to the start of the "Tender Period" of the contract.
• No positions are allowed to carry over during tender periods.
• Contracts are blocked for creating a fresh position one day prior to the tender period starting.