Classroom. Expression of interest and delivery

Today’s classroom decodes the term ‘expression of interest’ in delivery.

Physical delivery of commodities in a futures market takes place between the 11th and 20th of every month. The buyer and the seller have time to roll over the contract before it enters this staggered delivery period. But once they move into this period, it is the duty of the seller to bring the goods to the warehouse for delivery, while the buyer’s job is to keep the funds ready. Both parties have the option of selecting the warehouse for delivery through expression of interest.

A seller can give delivery from a particular warehouse, provided, such intent is clearly expressed in advance to the exchange. For instance, if you want to give delivery of castor from Patan, then the same should be told to the exchange. In the case of NCDEX, NCSE (NCDEX clearing front end), a web portal is the place where you can give your preferred delivery location. The login for this portal will be provided to you by the broker. Through this matching engine, a buyer and the seller stand a better chance of delivery from the respective choices of locations.

The buyer also has the option of selecting the warehouse of delivery through expression of intent. Such expression of interest is necessary because there are multiple warehouses across India accredited to the commodity exchanges. There is a default warehouse from which the delivery is provided in the absence of intent from the seller, known as the basis centre. This warehouse (default centre) varies with each of the commodities. The chances of mistakes arise when the expression of intent is unclear or not provided, leading to default of seller or additional cost to the buyer.

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