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Are trades/ settlements guaranteed by the exchanges?

April 26, 2017exchanges guaranteed settlements trades

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Are trades/ settlements guaranteed by the exchanges?

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Yes, the commodity exchanges have got some of the most high profile corporate as their promoters. Multi Commodity Exchange of India, promoted by Financial Technologies Ltd has got on board institutions such as SBI, HDFC Bank, Canara Bank, Corporation Bank, Bank of India, Union Bank of India, Bank of Baroda. The National Commodity and Derivatives Exchange (NCDEX) has got NSE, ICICI, NABARD, CRISIL, LIC, PNB, Canara Bank as the major share-holders. Such a high profile share-holding provides these exchanges valuable experience, knowledge and also high standards of operations, Also the exchange guarantees the settlement of trades and so eliminates the counter- party risk in the transactions. The exchange for this purpose maintains a Settlement Guarantee fund akin to the stock exchanges.