Criteria for Settlement Mode of Commodity Derivative Contracts

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.... 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 Derivatives Advisory Committee (CDAC) the following broad guideline....

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....liable 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 cash settled and physically settled derivative contracts on the same commodity may also be consid....