In the current scenario, there is no uniformity in the timeline of staggered delivery period for commodity futures contracts across exchanges even for the same commodities.
(Staggered delivery period is the duration during which sellers or buyers having open position may submit an intention to give or take the delivery of the contract).
To bring the uniformity in the timeline for commodity futures across exchanges, SEBI, capital marketer regulator has fixed “minimum duration of the staggered delivery period at five working days for all commodity futures”.
This minimum period of five days will enhance liquidity of commodity exchange as well as reduce the price manipulations.
However, flexibility to set higher duration of staggered delivery period for a commodity futures contract shall have given to exchanges after considering factors such as historical open interest, volume near expiry etc.
The exchanges have been asked to jointly prepare and publish a detailed framework containing various circumstances and factors which would require longer duration of staggered delivery period in a commodity.
While giving a detailed framework, the seller or buyer having open position shall have the option of submitting an intention of giving or taking delivery on any day during the staggered delivery period.
To receive delivery, it is ensured that all buyers have an equal opportunity irrespective of the size or value of the position i.e. exchanges shall allocate received intentions to give delivery during the day on each day, except for the expiry day and pay-in and pay-out for the allocated deliveries shall happen within two working days after allocation.
“However, preference may be given to buyers who have showed theirs intention of taking delivery based on the quality, location etc.
SEBI had also directed that a uniform mechanism should be maintained for commodity exchanges that will help participants for giving and taking deliveries and accordingly, changes can be made in contract specifications (if required).