Criteria for Settlement Mode of Commodity Derivative Contracts

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....effectively discharge their hedging function, commodity derivative contracts must be anchored to their respective underlying physical markets. An appropriate settlement mode and/or presence of other supporting conditions play a crucial role in ensuring convergence of prices between the derivatives market and the spot market. 2. In view of the above, in consultation with the Commodity Derivative....

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....o inadequate logistics and transport infrastructure. 2.2.2. There is availability of reliable benchmark price of the commodity which can be used as reference for settlement price. Exchanges shall satisfy themselves that the reference spot price is ro bust - fair indicator of prevailing prices and not susceptible to any distortion/manipulation. 2.3. Subject to the above conditions, both....