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Question
Why is the percentage of delivery ratio very low in the exchange based commodity derivatives?

Asked By syam - Commodity Exchanges

Answers (1)

Many people who participate in the exchanges are those who are not involved with the physical trading of the commodity. Thus they would not like receiving delivery and would not be in a position to give delivery. Standardized contracts make an unfeasible proposition for any trader to give or take delivery. E.g. if the size of 1 soya contract is 10MT, a trader cannot buy / sell 15MT of soya through the exchange. Also one cannot avail a credit facility in the exchanges that may be available in the local market. These and a host of other factors deter a person from giving / receiving delivery through the exchanges.
Answered By : ghanasyam
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