There is a very important distinction to understand here. While the SEBI (formerly FMC) regulates the commodity futures business in India, the commodity spot markets are not regulated by SEBI. They come under the direct purview of respective state governments. The SEBI does not regulate the spot markets of commodities in any way. Even it terms of settlement, they are slightly different. For example, commodity futures transactions on the MCX and the NCDEX are settled by the exchange clearing corporation with appropriate safeguards, risk management and trade guarantee. The spot market on the other hand is an OTC market and hence the settlement takes place on the base of broadly agreed upon rules and principles. There is no institutional mechanism for settlement of spot transactions.