Jeera exporters have also complained of delivery defaults as sellers can exit the market by paying only 2.5% f the traded contract amount as penalty. Khatua said, Apart from the penalty provision, we are working on other alternatives to penalise defaulters. One of the options, which the FMC is working on currently, is that the exchange should buy and ensure the delivery of commodity to the opposite party and recover differences in the futures and spot prices from the defaulter. Since the delivery of a number of farm commodities in the futures market have been made compulsory, the regulator has received complaints from traders and exporters that low penalty provision was encouraging more defaults. Khatua pointed out that the defaults were not very large in many cases, but we are tightening the system to ensure healthy trading practices.
On the other hand, leading agri-commodity bourse NCDEX denied any delivery defaults. We do not have any cases of defaults, as all contracts are settled as per the contract terms stipulated in all contracts, NCDEX chief business officer Unopam Kaushik said. He termed the allegation as baseless when pointed out that jeera contracts on the NCDEX have maximum delivery defaults as alleged by traders and exporters. Kaushik added, In futures trading, the exchange is a price-discovery and risk-hedging platform and not a delivery platform for compulsory delivery contracts.