In commodities trading, all futures contracts except energy contracts are compulsory delivery contracts. So, if the buyer doesn’t want to take delivery, then he/she has to mandatorily close the contract before it enters the staggered delivery period. This is for all compulsory deliverable contracts (agri/non-agri).

Staggered delivery period means the period beginning a few working days prior to the expiry of the contract and ending on the date of expiry. The minimum duration of staggered delivery period shall be at least five working days, as per SEBI guidelines. For instance, if a contract is ending on June 30, then from June 25 the staggered delivery period begins. However, exchanges have the flexibility to set higher duration of staggered delivery period for any commodity futures contract, taking into account factors including historical open interest, volumes near expiry and demand.

Thus, the seller/buyer having open position have an option, of submitting an intention of giving/taking delivery, on any day during the staggered delivery period. During this period, the buyer to whom the delivery is allocated will not be allowed to refuse delivery. If the seller fails to deliver, penal provisions for seller default apply. On expiry of the contract, all the open positions are marked for compulsory delivery. In other words, traders who prefer physical delivery of the goods would keep an open position till the expiry, while others should close their contracts, as exchange levies delivery period margin during the staggered delivery period.

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