Traders demand hefty fine for delivery defaults

Hit hard by continuing delivery defaults in futures trading, jeera traders and exporters have asked the FMC to impose stringent penalty on culprits.

They said the existing penalty of 2.5 per cent of the traded contracts is not deterrent enough.

In a letter to the FMC, Narayanbhai L Patel, Chairman of the Agricultural Produce Marketing Committee (APMC) in Unjha, Gujarat, has requested the regulator to enhance the penalty in cumin seed (jeera) to 25 per cent or ensure 100 per cent delivery of the commodity.

He pointed out that “by paying the nominal amount of 2.5 per cent as penalty, the fake seller escapes from his responsibility”.

 

FMC had reduced the penalty charges for delivery defaults from 8 per cent to 2.5 per cent of the traded contract in October 2007. While 0.5 per cent goes to the affected party, the remaining 2 per cent goes to the Investor Protection Fund of the exchange. About 12,000 tonnes of jeera are traded daily on the NCDEX. The volume of jeera contracts on the exchange has plunged by half to about 400,000 tonnes per month from over 800,000 tonnes in June last year.