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SEBI directs NCDEX to discontinue forward trading contracts

18 Jan 2016 Evaluate

The market regulator Securities and Exchange Board of India (SEBI) has directed NCDEX to discontinue forward trading contracts. SEBI notified that the market participants will not be allowed to enter into fresh forward contracts till further orders. It has however allowed the existing forward contracts to be settled according to the terms of the contracts.

NCDEX had last month facilitated delivery of 9,660 tonnes of commodities on the forward platform. The forward segment registered volume of 40,970 tonnes worth Rs 179 crore since its launch last February. It facilitates trade in 26 commodities on the forward platform.

Unlike futures contract, commodity specification and quantity for delivery is decided mutually by both seller and buyer in forward contract while the exchange stands as guarantor for execution of the contract.