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Commodity exchanges to penalize buyers refusing delivery

Commodity exchanges to penalize buyers refusing delivery
PTI
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First Published: Wed, Sep 17 2008. 03 01 PM IST
Updated: Wed, Sep 17 2008. 03 01 PM IST
New Delhi: Now, buyers have to pay for defaulting to take delivery on the county’s leading agri-commodity exchange NCDEX, following the commodity market regulator’s move to check defaults.
On the direction of the Forward Markets Commission, the leading agri-commodity bourse NCDEX has issued a circular saying it would recover dues from the buyer if he defaults to take the delivery of goods in case of compulsory delivery contracts.
If a buyer defaults, the exchange would recover the due amount from the buyer along with prescribed charges, the circular said.
The exchange further said that to recover dues from a buyer-defaulter, the exchange would also have the right to sell the goods. If the sale proceeds are insufficient, then the buyer would be liable to pay the balance, it added.
Besides, NCDEX has also increased the penalty to 3% from earlier the 2.5% if a seller fails to deliver the commodity, especially in case of ‘compulsory delivery contracts’.
Of this, 1% would go to the buyer entitled to receive delivery, 1.75% to the Investor Protection Fund and 0.25% to the exchange for administrative expenses, it added.
“The exchange has revised the penalty structure in case of ‘compulsory delivery contracts’ for failure to meet delivery obligations by the sellers,” it said, adding the revised penalty would be applicable to contracts expiring in October and thereafter.
The penalty hike comes shortly after complaints from traders and exporters that low penalty has encouraged defaults in compulsory delivery contracts of agricultural commodities.
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First Published: Wed, Sep 17 2008. 03 01 PM IST