...Commodity Derivatives Market in India: Development, Regulation and Future Prospects Introduction The Indian economy is witnessing a mini revolution in commodity derivatives and risk management. Commodity options trading and cash settlement of commodity futures had been banned since 1952 and until 2002 commodity derivatives market was virtually nonexistent, except some negligible activity on an OTC basis. Now in September 2005, the country has 3 national level electronic exchanges and 21 regional exchanges for trading commodity derivatives. As many as eighty (80) commodities have been allowed for derivatives trading. The value of trading has been booming and is likely to cross the $ 1 Trillion mark in 2006 and, if all goes well, seems to be set to touch $5 Trillion in a few years. Chequred History The history of organized commodity derivatives in India goes back to the nineteenth century when the Cotton Trade Association started futures trading in 1875, barely about a decade after the commodity derivatives started in Chicago. Over time the derivatives market developed in several other commodities in India. Following cotton, derivatives trading started in oilseeds in Bombay (1900), raw jute and jute goods in Calcutta (1912), wheat in Hapur (1913) and in Bullion in Bombay (1920). However, many feared that derivatives fuelled unnecessary speculation in essential commodities, and were detrimental to the healthy functioning of the markets for the underlying commodities...
Words: 3982 - Pages: 16
...ANALYSIS OF COMMODITY MARKET (GOLD & SILVER) Submitted in partial fulfilment of the requirements for Post Graduate Diploma in Management (PGDM) By SNEHA GUPTA ERA BUISSNESS SCHOOL Dwarka sector-9 July 2013 Acknowledgement I owe many thanks to all those people who helped and supported me during the process & completion of this project. I would thank my Institution for giving me an opportunity to undertake this project. My deepest thank to Mr. Vinay Pratap Singh (Sr. Manager online), Mr. B.Sanjeev Kumar my industry mentor, for guiding me throughout the project completion process with attention and care. He displayed all the patience required to go through the project and make necessary correction as and when needed. My Summer Training at “SMC Global Securities Ltd.” is an ardent, unforgettable and fruitful experience. I’m overwhelmed with the friendly & co-operative attitude, and the enlightened advice and information extended to me by everyone. I thank Prof. Hemant Indurkar – my faculty mentor for supporting and monitoring my work since the beginning of the project. I am grateful to all the fellow employees of “SMC Global Securities Ltd” for their help, support and amiability throughout the internship. Finally, yet importantly, I would like to express my heartfelt thanks to my beloved parents for their blessings, my friends for their help and wishes for the successful completion of this project. Mukesh Kumar Mishra ...
Words: 649 - Pages: 3
...Issues and Concerns of Commodity Derivative Markets in India: An Agenda for Research Nilanjan Ghosh 1. Introduction Commodity derivative markets have traditionally been a contentious issue at various policy forums across the world, particularly with the imbroglio created by allegations from various corners that they encourage excessive speculation and are therefore responsible for the recent commodity price escalation. While this suspicion of excessive speculation in the commodity markets has always been there among policymakers in developing nations like India, it has become more widespread since 2008 in the wake of worldwide inflationary pressures on food and energy. The sudden deflation in the value of various assets underlying different derivatives, which includes commodity derivatives, in the wake of the global meltdown has provoked greater apprehension about the economic utility of futures markets. The suspicion has reached such a high that even the U.S., the biggest proponent of market forces with the most active commodity exchanges in the world, is considering new modes of regulation, and is also investigating the role of commodity derivative trading in the steep rise in prices of wheat, rice, and crude oil. On the other hand, ever since commodity derivative trading was allowed in India in the new millennium, there has always been a hue and cry against such markets, with the alleged notion of excessive “speculation”, though there has rarely been any evidence for it. Rather...
Words: 6878 - Pages: 28
...“N” Day Breakout Model on Commodity Market: An Empirical Investigation Zhenyi Yang 12/12/2012 1. Introduction There are various strategies to make profits on the commodity markets. The “N” day breakout model is one of the easiest model. However, it is a very effective model and used by many traders. The article uses the “N” day breakout model, combined with the “fixed fractional” risk management scheme, to study the return of the commodity market. The article also compares the different outcomes with different data manipulation method and the potential reasons behind the difference. 2. The “N” Day Break Out Model The N day break out model utilizes the method that the futures are longed at N day high and shorted at M day low. The rational explanation of the method is that the futures usually continue to rise after a breakout its long-term high. Also, the futures continue to fall after it breaks its short-term low. To simplify the problem, in this article, it chooses the 100 day high as the buying point and the 10 day low as the selling point. The period of study ranges from Dec 2002 to Dec 2012. Moreover, the article also studies the maximum profit one million account balance would make with this strategy with each commodity does not exceed 1% risk. 3. Data Manipulation Because the commodity future expires after one or two years, for a longer period time, the charts of different futures contracts needs to be connected. Some methods are continuous, which...
Words: 1623 - Pages: 7
...Commodity Exchange Market in Bangladesh Prepared by Kamal Uddin Department of Banking &Insurance Faculty of Business Studies, University of Dhaka Outline Rationale Define Commodity & Commodity Exchange Market How Commodity Exchange Market Works? Necessity of Commodity Exchange Market in our Economy Requirement for a Commodity Exchange Market What Bangladesh Doing? Recommendation Rationale: Price Volatility in Our Economy Reason Behind Price Volatility • Intermediaries between producers & end-consumers. • Syndication. • Absence of a proper market system. To remove this barrier a proper market system is required where buyer and seller will have the regular & updated information of market, they will have direct access to market for buying and selling their desired products. This can be done by establishing a Commodity Exchange Market Define Commodity and Commodity Exchange • A Commodity is a product which has a commercial value. It can be produced, bought, sold and consumed. • A commodities exchange is an exchange, just like any Stock Exchange where various commodities and derivatives products are traded. Most Commodity Exchanges across the world trade in agricultural products and other raw materials • To be traded on an Exchange must meet certain specification regarding self life, quality standard, demand and supply and some more. Functionalities Spot or Cash • Direct buy and sales • Usually for immediate consumption • Immediate delivery &...
Words: 872 - Pages: 4
...Abraham Trading Company provides commodity exposure with an established manager who has more than 23 years of experience of systematic trading in the global commodity markets. February 2011 SUITE 2000 100 CONGRESS AVENUE AUSTIN, TX 78701 (512) 370-5234 PROFESSIONAL MONEY MANAGEMENT IN GLOBAL MARKETS SINCE 1988 MOODY BUILDING SECOND & MAIN CANADIAN, TX 79014 (806) 323-8000 IMPORTANT NOTICE These materials do not constitute an offer of securities. Such an offer will only be made by means of a confidential private placement memorandum to be furnished to qualified prospective investors. This document is confidential and is intended only for the information of the person to whom it was delivered. This document is not to be reproduced or transmitted, in whole or in part, without the prior written consent of Abraham Trading Company. ABRAHAM TRADING COMPANY PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS WWW.ABRAHAMTRADING.COM 1 BACKGROUND OF ABRAHAM TRADING COMPANY • Salem Abraham began managing customer accounts using his systematic approach in January of 1988 and in 1990 organized Abraham Trading Company to act as a CTA for all customer accounts. • In 2005, started doing extensive research in multiple strategies. • In January 2006, became a multi-strategy firm by implementing medium term trend and long only stock strategies. • In September 2007, added mean reversion and short term momentum strategies. • Named to the Barron’s Top 100 Hedge...
Words: 2988 - Pages: 12
...Why commodity markets were started The first recorded instance of futures trading occurred with rice in 17th Century Japan. There is some evidence that there may also have been rice futures traded in China as long as 6,000 years ago. Futures’ trading is a natural outgrowth of the problems of maintaining a year-round supply of seasonal products like agricultural crops. In Japan, merchants stored rice in warehouses for future use. In order to raise cash, warehouse holders sold receipts against the stored rice. These were known as "rice tickets." Eventually, such rice tickets became accepted as a kind of general commercial currency. Rules came into being to standardize the trading in rice tickets. These rules were similar to the current rules of American futures trading. In the United States, futures trading started in the grain markets in the middle of the 19th Century. The Chicago Board of Trade was established in 1848. In the 1870s and 1880s the New York Coffee, Cotton and Produce Exchanges were born. Today there are ten commodity exchanges in the United States. The largest are the Chicago Board of Trade, The Chicago Mercantile Exchange, the New York Mercantile Exchange, the New York Commodity Exchange and the New York Coffee, Sugar and Cocoa Exchange. Worldwide there are major futures trading exchanges in over twenty countries including Canada, England, France, Singapore, Japan, Australia and New Zealand. The products traded range from agricultural staples like Corn and...
Words: 2732 - Pages: 11
...Review of Warehouse Receipt System and Inventory Credit Initiatives in Eastern & Southern Africa Final report commissioned by UNCTAD under the All ACP Agricultural Commodities Programme (AAACP) *The views expressed in this paper are those of the author and do not necessarily reflect the views of the United Nations September 2009 CONTENTS CONTENTS ............................................................................................................................................. i ACKNOWLEDGEMENT .....................................................................................................................iii GLOSSARY OF ABBREVIATIONS .................................................................................................. iv GLOSSARY OF ABBREVIATIONS .................................................................................................. iv SUMMARY ............................................................................................................................................ 1 Introduction ....................................................................................................................... 1 Observations on the different approaches ......................................................................... 1 Policy conclusions and recommendations ........................................................................ 3 Specific proposals .....................................................................
Words: 56151 - Pages: 225
...Chapter – I INTRODUCTION 1.Introduction of Project Work : Why Commodity Futures? ADVANTAGES OF FUTURES MARKET TO ITS VARIOUS PARTICIPANTS Stockiest / Jewelers / Farmers | | Traders, Jobbers & Arbitragers | * Can hedge their underlying * Get an extensive market * Can get loan against Warehouse Receipts | | Trading Opportunity | Investment Opportunity | Corporates | | Additional Advantage | * Can hedge by offsetting product exposure * Can hedge by parking only margin amount * Can buy goods without agents with Quality Assurance | | Spread Trading Opportunity | Arbitrage Opportunity | TABLE-1.1 Why Indian Commodity Exchange? India is essentially a commodity based economy constituting of Agriculture, Energy, Precious Metals and Base Metals. Couple of unique features / advantage seen in our exchanges, which is not seen elsewhere, are: 1. Timings: Our Trade timings are well matched with Global Market timings. 2. Number of commodities: Nowhere in the world more than 8 to 10 commodities are traded in a single exchange, but our exchanges are successfully managing over 40 commodities individually. Why Sharekhan? Superior & Consistant Research Performance of…. 1. Cutting Edge Analysis of Major Commodities 2. Relevent Analysis of Market News & Information 3. Sound Technical Analysis for Short Term Trends 4. Special Reports such as… * Hedge Solutions: To offset Product Exposure...
Words: 10211 - Pages: 41
...mining company Reference Code: ML00007-065 Publication Date: January 2013 WWW.MARKETLINE.COM MARKETLINE. THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED GLENCORE & XSTRATA: CREATING THE FOURTH LARGEST GLOBAL MINING COMPANY © MARKETLINE THIS PROFILE IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED ML00007-065 /Published 01/2013 Page | 1 OVERVIEW Catalyst Glencore International, a commodity trading giant, is seeking to merge with diversified mining company Xstrata. The move was announced in February 2012 with the proposal accepted by shareholders in November 2012. The deal is worth $31bn and would create the fourth largest mining company in the world behind the top three of BHP Billiton, Vale, and Rio Tinto. The company would also possess leading positions in other commodities in power generation and agricultural products. Summary Glencore is a company which operates in commodity markets, including mining. The company engages in both industrial activity and marketing, which allows it to safeguard against volatilities in an individual market. Further, by engaging in marketing, the company is able to adapt more effectively to adverse conditions. Glencore has demonstrated value creation in its acquisitions, with notable acquisitions including Kazzinc and Viterra. The company’s size also now allows it to negotiate big contracts, as it did with Rusal. Glencore was fast tracked into the London FTSE stock exchange during its initial public offering (IPO)...
Words: 9034 - Pages: 37
...SUMMER INTERNSHIP REPORT A REPORT ON Steel Price Fluctuations and its Determinants and its Correlation with Different Factors Submitted By- Ajaya Kumar Mall (10BSPHH010049) INDIAINFOLINE LIMITED A Report On Steel Price Fluctuations and its Determinants and its Correlation with Different Factors Submitted by: Ajaya Kumar Mall (10BSPHH010049) A report submitted in partial fulfillment of the requirements of MBA program of IBS Hyderabad INDIAINFOLINE LIMITED Distribution List: Prof. C. Padmavathi Mr. Khamis Raza Taqvi Faculty Guide Company Guide Dept. Of Finance Asst. Vice President IBS Hyderabad IndiaInfoline Limited Date of Submission: 13th May, 2010 AUTHORIZATION This report has been prepared under the guidance of Mr. Khamis Raza Taqvi, Associate vice President of IndiaInfoline Limited, Mr. Sachin Jain, Team Manager, IndiaInfoline Limited and Dr C Padmavathi, Department of Finance, IBS Hyderabad. This report is submitted as partial fulfillment of the requirement of MBA Program of IBS Hyderabad. Date: 13 May, 2011 Ajaya Kumar Mall ...
Words: 28418 - Pages: 114
...Graduate School of Development Studies A Research Paper presented by: Celeste Aida Molina Fernández (Guatemala) in partial fulfilment of the requirements for obtaining the degree of MASTERS OF ARTS IN DEVELOPMENT STUDIES Specialisation: Rural Livelihoods and Global Change (RLGC) Members of the examining committee: Prof. Dr Max Spoor Prof. Dr Peter Knorringa The Hague, The Netherlands November, 2010 Disclaimer: This document represents part of the author’s study programme while at the Institute of Social Studies. The views stated therein are those of the author and not necessarily those of the Institute. Research papers are not made available for circulation outside of the Institute. Inquiries: Postal address: Institute of Social Studies P.O. Box 29776 2502 LT The Hague The Netherlands Location: Kortenaerkade 12 2518 AX The Hague The Netherlands Telephone: +31 70 426 0460 Fax: +31 70 426 0799 Acknowledgments I would like to express my deepest appreciation to all the people who in one way or another contributed to the completion of this study, especially the interviewees, who generously shared their time and knowledge about the coffee sector in Ethiopia. My sincerest appreciation goes to Bilisuma Dito, who first introduced me to the ECX and provided me with key contacts for the fieldwork. Many thanks to Martha Kibru, Saba Yifredew...
Words: 20624 - Pages: 83
...Oxfam: International Commodity Research – Coffee Confidential: Not for distribution or publication The Coffee Market – a Background Study Oxfam: International Commodity Research – Coffee Confidential: Not for distribution or publication Acknowledgements This background study was written by Oliver Brown, Celine Charveriat and Dominic Eagleton. The authors want to thank the following persons for their useful comments: Mehmet Arda, Maria Jose Barney, Bart Ensing, Penny Fowler, Brian Lewin, Lamon Rutten, Denis Seudieu, Robert Simmons, Marcelle Strazer, Kevin Watkins, Michael Wheeler and Pete Williams. i Oxfam: International Commodity Research – Coffee Confidential: Not for distribution or publication EXECUTIVE SUMMARY '[When prices are low] , we sacrifice a lot in the way of clothing, tools and food. We can’t afford meat, we had to buy other parts of the animal which were inferior. We can’t eat eggs, or drink milk...When the children get ill we don’t have the money to take them to the doctor… One always lives with uncertainty, always in debt; it's always borrow here, borrow there; we live dependent on credit... Of course, there is no peace living with such uncertainty. You don't know whether to take out a loan or not because you could lose the money you've invested.’ Vitelio Menza, small coffee producer in Colombia1 Providing livelihoods to farmers in developing countries is a crucial challenge for reducing world poverty. When fairly priced, export...
Words: 23596 - Pages: 95
...The Indian commodity futures volumes have grown 5.5 times from Rs.20.53 trillion in 2005-06 to Rs.112.52 trillion in 2010-11. Currently, the average monthly volume on the Indian commodity exchanges is Rs.6 trillion. MCX leads the industry, followed by NCDEX. MCX is not only number one in India but has achieved some global milestones too. It was the largest exchange in silver (in terms of number of futures contracts traded in 2010), number two in gold, copper and natural gas and number three in crude oil. When we say India is the largest exchange in silver, it is a great achievement for the Multi Commodity Exchange. Talking about agricultural commodities, the Indian commodities market has futures contracts of commodities such as black pepper, cumin seed, mentha oil and many more which are internationally traded but only listed in India; internationally traders tend to consider these as benchmark rates. Though it is at a nascent stage, the volumes in the Indian commodities market have a different story to tell. From Rs.20 trillion, the volumes have reached Rs.112.52 trillion in FY10-11. When we see this kind of a spurt in volumes, we must remember that it has primarily been a futures market, without Options. Foreign institutional investors, domestic institutions, banks and insurance companies are not allowed to trade on the Indian commodity bourses and a majority of volumes come from jobbers, arbitrageurs, retail traders and small scale enterprises and corporates (for hedging)...
Words: 838 - Pages: 4
...ทิศทางโลจิสติกส์ประเทศไทยและทิศทางงานวิจย ั รศ.ดร.ดวงพรรณ กริชชาญชัย สํานักประสานงานชุดโครงการวิจยโลจิสติกส์ ั ภายใต้ สํานักงานกองทุนสนับสนุนการวิจย (สกว.) ั egdkc@mahidol.ac.th เครือข่ายนักวิจยไทยด้านการจัดการโซ่คุณค่าและโลจิสติกส์ (ThaiVCML) และสํานักประสานงาน ั ชุ ด โครงการวิจย โลจิส ติก ส์ ซึงได้ร บ การสนั บสนุ นโดย สํา นั ก งานกองทุ น สนับ สนุ น การวิจ ย (สกว.)ได้ ั ั ั ดําเนินงานด้านโลจิสติกส์และโซ่อุปทานมาตังแต่ปี 2545 วัตถุประสงค์หลัก คือ การสร้างให้เกิดงานวิจยและ ั องค์ความรู้ด้านการจัดการโลจิสติกส์และโซ่อุ ปทานขึนในประเทศ โดยใช้กลไกประสานงานวิจยในกลุ่ ม ั เครือข่ายนักวิชาการให้เชือมโยงกับโจทย์จริงจากภาครัฐและภาคอุตสาหกรรม ในการนี ทางสํานักประสานงานชุดโครงการวิจยโลจิสติกส์ ได้รวบรวมข้อมูลทีผ่านมาทังหมดใน ั ประเทศรวมถึงงานวิจยด้านโลจิสติกส์และโซ่อุปทานในกลุ่มเครือข่ายนักวิจยไทยด้านการจัดการโซ่คุณค่า ั ั ั และโลจิสติกส์ (ThaiVCML) และกลุ่มงานวิจยทีสนับสนุ น โดย สํานักงานกองทุนสนับสนุ นการวิจย (สกว.) ั และการระดมสมองในงานสัมมนาเชิงปฏิบตการระดมสมองเพือกําหนดทิศทางโลจิสติกส์ของไทย ในเมือวัน ั ิ อังคารที 9 ธันวาคม 2551 ทีผ่านมานัน สรุปความได้ดงนี คือ ั 1) ประเทศไทยใช้คาว่า “ โลจิสติกส์” เป็ นเครืองมือเชิงกลยุทธ์ เพือนําสู่วตถุประสงค์ ํ ั ความสามารถในการแข่งขันของประเทศ ” ( National Competitiveness ) 2) “ โลจิสติกส์” ต้องมี “บริบท” ให้อยู่ เพราะหลักการจัดการโลจิสติกส์จะขึนตามบริบท และ สิงแวดล้อมทีเปลียนไป 3) บริบทของโลจิสติกส์ในประเทศไทย มี 2 ระดับใหญ่ๆ คือ ระดับจุลภาค และระดับมหภาค โดย กรอบของโลจิสติกส์ในประเทศไทยสามารถสรุปได้ดงภาพ คือ ั 1 หากจะแบ่งระบบโลจิสติกส์ของไทยตามบริบทแบ่งได้...
Words: 741 - Pages: 3
