NISM Series XVI - Commodity Derivatives Exam Notes
Page 31 Of 36
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Warehouse receipts which are not negotiable, need to be electronically registered, to facilitate settlement through the Clearing Corporation.
As per the Warehousing (Development and Regulation) Act, 2007 (WDRA), negotiable warehouse receipts (NWRs) can be in both paper and electronic form. The electronic warehouse registry system of the WDRA will enable multiple transfers without physical movement of goods.
The total amount of the penalty on the seller, in case of delivery default will be equal to 3.0 percent of the difference between the Final Settlement Price (FSP) and the average of the 3 highest of the last spot prices of the 5 succeeding days after the expiry of the contract (E+1 to E+5 days), if the average price so determined is higher than FSP; else this component will be zero.
Under the staggered delivery mechanism, the seller has an option of marking an intention of delivery on any day during the last 10 days of the expiry of the contract.
Wherever staggered delivery is permitted by the exchange in any contract specifications, the settlement price for any delivery allocation during staggered period (i.e., upto 1 day prior to expiry) would be the last available spot price displayed by the Exchange for the respective contract.
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