| Forward contracts in commodities launched in September 2014 to reduce speculative activity in the commodity market and draw genuine investors to the exchange platform have found few takers. Market participants blame it on structural issues in the product as it does not offer full trade guarantee and zero counter-party default risk, two essentials for any product traded on the exchange platform.
The fraud at the National Spot Exchange Ltd (NSEL) too has made entities wary of trading in any product where the bourse does not guarantee the trade, market participants say. According to the Forward Contracts (Regulation) Act, 1952, which regulates commodity trading in India, a “forward contract” is a contract for the actual delivery of goods unlike futures contract, wherein the buyer can opt for the contract to be settled in cash...............................................Full Article: Source
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