Commodity market concepts
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Querist : Anonymous
Querist :
Anonymous
(Querist)
13 July 2015
What is staggered delivery? What is difference between staggered delivery and scrips entering tender period?
Arpit Shah
(Expert)
13 July 2015
Staggered Delivery: Most of the agricultural commodities traded on the domestic exchanges are under the “Compulsory Delivery” system wherein it is mandatory for sellers to deliver goods upon the expiry of the contract. In a move which gives the seller an option to tender delivery much before the expiry of the contract, the Regulator has introduced a system of staggered delivery in Compulsory Delivery contracts which could go a long way towards easing pressures towards the expiry of the contract and facilitate convergence in the futures and underlying physical markets. Under this system, the Seller can tender delivery any time from the 5th of the expiring month and the expiry date (for contracts expiring in June 2012 onwards). This would have twin benefits of facilitating smooth closure of the contracts as deliveries would be spread over a period of two weeks and permitting the Seller to tender delivery and exit his position, thereby reducing his holding and margining costs. It would also ensure that only buyers who intend to take delivery would remain in the expiry month contract during this period, thereby reducing speculative interest towards the expiry of the contract.
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Arpit Shah
(Expert)
13 July 2015
Staggered Delivery: Most of the agricultural commodities traded on the domestic exchanges are under the “Compulsory Delivery” system wherein it is mandatory for sellers to deliver goods upon the expiry of the contract. In a move which gives the seller an option to tender delivery much before the expiry of the contract, the Regulator has introduced a system of staggered delivery in Compulsory Delivery contracts which could go a long way towards easing pressures towards the expiry of the contract and facilitate convergence in the futures and underlying physical markets. Under this system, the Seller can tender delivery any time from the 5th of the expiring month and the expiry date (for contracts expiring in June 2012 onwards). This would have twin benefits of facilitating smooth closure of the contracts as deliveries would be spread over a period of two weeks and permitting the Seller to tender delivery and exit his position, thereby reducing his holding and margining costs. It would also ensure that only buyers who intend to take delivery would remain in the expiry month contract during this period, thereby reducing speculative interest towards the expiry of the contract.
Querist : Anonymous
Querist :
Anonymous
(Querist)
13 July 2015
Thanks for the info, Arpit. Need some more details.
How is the buyer marked there? Lets say the expiry date of a contract is July 10th, in that case the tender start date would be 5th and staggered delivery date would be July 1st. So if a commodity X 1 lot is sold on July 2nd and If I and another person buy 1 lot each, which one will be marked as staggered delivery? Is it a obligation to buyer and right to seller?
How is the buyer marked there? Lets say the expiry date of a contract is July 10th, in that case the tender start date would be 5th and staggered delivery date would be July 1st. So if a commodity X 1 lot is sold on July 2nd and If I and another person buy 1 lot each, which one will be marked as staggered delivery? Is it a obligation to buyer and right to seller?
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