Staggered delivery, early delivery system, early pay-in facility, penalty on delivery default, fixation of FSP and changes in expiry dates
Summary
This circular consolidates and updates norms for National Commodity Derivatives Exchanges regarding delivery systems, penalties, and pricing. It mandates specific frameworks for staggered delivery, early delivery, and early pay-in facilities to ensure market integrity. The document also establishes penalty structures for delivery defaults and procedures for fixing the Final Settlement Price.
Text
Rules made by the erstwhile Forward Markets Commission (FMC) applicable to recognised associations under FCRA continue in force for one year from September 29, 2015, or until notified by SEBI.
Tender period starts with the onset of the staggered delivery period; sellers/buyers may mark intention up to expiry; exchange allocates delivery via random methodology ensuring equal opportunity.
If tender date is T, pay-in and pay-out shall happen latest by T+2th working day.
An early delivery period may be provided during E-14 to E-1 days where buyers/sellers can give intention to take/give delivery.
If there is no intention matching for delivery between sellers and buyers, such delivery intention will get automatically extinguished at the close of E-1 day.
Exchanges shall provide early pay-in facility to market participants permitting deposit of certified goods to Exchange accredited warehouse against relevant futures contracts sold.
For short positions against which early pay-in has been made, exchanges may exempt imposition of all types of margins based on risk perception, but must collect mark to market margins.
Penalty on seller for delivery default in agri-commodities is 3% of Settlement Price plus replacement cost.
Penalty on seller for delivery default in non-agri commodities is 3% of Settlement Price plus replacement cost.
At least 1.75% of Settlement Price shall be deposited in IPF; up to 0.25% retained by Exchange; 1% of Settlement Price plus replacement cost goes to buyer.
Buyer default shall not be permitted.
FSP shall be arrived at by taking the simple average of the last polled spot prices of the last three trading days viz., E0, E-1 and E-2.
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Source: SecMarx — Staggered delivery, early delivery system, early pay-in facility, penalty on delivery default, fixation of FSP and changes in expiry dates. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.