Do the commodity exchanges facilitate delivery?
The commodity exchanges do facilitate delivery, although it has been observed world-over that only 2 per cent of all the trades result in actual delivery. Why is the percentage of delivery ratio very low in the exchange-based commodity derivatives? Many people who participate in the exchanges are those who are not involved with the physical trading of the commodity. Thus they would not like receiving delivery and would not be in a position to give delivery. Standardised contracts make an unfeasible proposition for any trader to give or take delivery. E.g. if the size of 1 soya contract is 10 MT, a trader cannot buy / sell 15 MT of soya through the exchange. Also one cannot avail a credit facility in the exchanges that may be available in the local market. These and other factors deter a person from giving / receiving delivery through the exchanges. What is the size of the commodities market as compared to the equity market? In the developed markets the volumes on the exchange-based com
