What is forward contract in commodities?
A forward contract is a legally enforceable agreement for delivery of goods or the underlying asset on a specific date in future at a price agreed on the date of contract. Under the Securities Contracts Regulation Act, the contracts for delivery of goods, which are settled by payment of money difference or where delivery and payment is made after a period of 11 days, are forward contracts.
1. What are standardised contracts?
Futures contracts are standardised.
In other words, the parties to the contracts do not decide the terms of futures contracts; but they merely accept terms of contracts standardized by the Exchange.
2. What are customised contracts?
Forward contracts (other than a futures) are customised. In other words, the terms of forward contracts are individually agreed between two counter parties. These con tracts are also commonly known as OTC Contracts.
3. Is delivery mandatory in futures contract trading?
No. The provision for delivery made in the futures contracts is made so as to ensure that the futures prices in commodities are in conformity with the underlying.Delivery in a futures contracts could be either compulsory or based on the sellers option.
4. What are NSTD contracts?
A Non-Transferable Specific Delivery Contract (NSTD) is an enforceable bilateral agreement under which the terms of contract are customized and the performance of the contract is by giving specific delivery of goods. The rights or liabilities under this contract cannot be transferred by transferring delivery order, railway receipt, bill of lading, warehouse receipts or any other documents of title to the goods.
5. What are TSD contracts?
A Transferable Specific Delivery (TSD) contract is an enforceable customised agreement where unlike nontransferable specific delivery contracts, the right or liabilities under the delivery order, railway receipt, bill of lading, warehouse receipts or any other documents of title to the goods are transferable. The contract is performed by delivery of goods by first seller to the last buyer. The parties, other than the first seller and the last buyer, perform the contract merely by exchanging money differences.
TEXT: http:www.fmc.gov.in
1. What are standardised contracts?
Futures contracts are standardised.
In other words, the parties to the contracts do not decide the terms of futures contracts; but they merely accept terms of contracts standardized by the Exchange.
2. What are customised contracts?
Forward contracts (other than a futures) are customised. In other words, the terms of forward contracts are individually agreed between two counter parties. These con tracts are also commonly known as OTC Contracts.
3. Is delivery mandatory in futures contract trading?
No. The provision for delivery made in the futures contracts is made so as to ensure that the futures prices in commodities are in conformity with the underlying.Delivery in a futures contracts could be either compulsory or based on the sellers option.
4. What are NSTD contracts?
A Non-Transferable Specific Delivery Contract (NSTD) is an enforceable bilateral agreement under which the terms of contract are customized and the performance of the contract is by giving specific delivery of goods. The rights or liabilities under this contract cannot be transferred by transferring delivery order, railway receipt, bill of lading, warehouse receipts or any other documents of title to the goods.
5. What are TSD contracts?
A Transferable Specific Delivery (TSD) contract is an enforceable customised agreement where unlike nontransferable specific delivery contracts, the right or liabilities under the delivery order, railway receipt, bill of lading, warehouse receipts or any other documents of title to the goods are transferable. The contract is performed by delivery of goods by first seller to the last buyer. The parties, other than the first seller and the last buyer, perform the contract merely by exchanging money differences.
TEXT: http:www.fmc.gov.in
