The Hindu Business Line : NCDEX changes default penalty norms

NATIONAL Commodity and Derivatives Exchange Ltd (NCDEX) has made some changes in penalty and other charges for defaults in delivery relating to futures contracts in castor seed, guar seed and guar gum.

In a circular to its trading and clearing members of the exchange, the exchange said defaults in delivery would be settled in cash within the period prescribed by the exchange at the highest price from the last trading date till the final settlement date with a mark up thereon as may be decided by the relevant authority from time to time.

At the exchange, the delivery position would be created in one of the following two ways. First, contracts wherein sellers are provided with a right to deliver if any seller with open interest position desires to give delivery at a particular centre, then the corresponding buyer with open position as matched by the process put in place by the exchange shall be bound to settle by taking physical delivery.

Second, in all other cases, the exchange would match the intentions and arrive at the delivery position according to the process put in place by it.

After the delivery position is created, defaults in delivery may occur as follows: By the selling member not giving delivery or not moving the commodity to the relevant warehouses on or before the settlement date as per the settlement calendar of the exchange, which will be construed as not giving delivery.