21-09-2017, 12:00 PM
Commodity trading in India has a long history. In fact, commodity trading in India began well before it began in many other countries. However, years of foreign rule, droughts and periods of scarcity and government policies made commodity trading in India lessened. However, commodity trading was recently restarted in India. Today, in addition to numerous regional exchanges, India has six domestic commodity exchanges, namely Multi Commodity Exchange (MCX), National Commodity and Derivatives Exchange (NCDEX), National Multi-Commodity Exchange (NMCE) and Indian Commodity Exchange (ICEX) Exchange of derivatives (ACE) and Universal commodity exchange (UCX). The regulatory body is the Forward Market Commission (FMC), established in 1953. As of September 2015, FMC merges with the Securities and Exchange Board of India, SEBI.
An exchange of raw materials is an exchange where several commodities and derivatives are traded. Most commodity markets around the world market agricultural products and other commodities (such as wheat, barley, sugar, corn, cotton, cocoa, coffee, dairy products, pork belly , oil, metals, etc.). These contracts may include spot prices, futures, futures and options on futures. Other sophisticated products may include interest rates, environmental instruments, barter or ocean freight contracts.
Commodity trading usually trades commodity futures contracts, such as commercial contracts to receive something, say corn, in a certain month. A farmer who grows corn can sell a future contract on his corn, which will not be harvested for several months, and guarantee the price that will be paid when delivered; a breakfast cereal producer buys the contract now and guarantees that the price will not go up when delivered. This protects the farmer from price falls and the buyer from price increases.
Speculators and investors also buy and sell futures contracts in order to earn profits and provide liquidity to the system. However, because of the financial leverage provided to traders by the exchange, commodity futures traders face a substantial risk.
An exchange of raw materials is an exchange where several commodities and derivatives are traded. Most commodity markets around the world market agricultural products and other commodities (such as wheat, barley, sugar, corn, cotton, cocoa, coffee, dairy products, pork belly , oil, metals, etc.). These contracts may include spot prices, futures, futures and options on futures. Other sophisticated products may include interest rates, environmental instruments, barter or ocean freight contracts.
Commodity trading usually trades commodity futures contracts, such as commercial contracts to receive something, say corn, in a certain month. A farmer who grows corn can sell a future contract on his corn, which will not be harvested for several months, and guarantee the price that will be paid when delivered; a breakfast cereal producer buys the contract now and guarantees that the price will not go up when delivered. This protects the farmer from price falls and the buyer from price increases.
Speculators and investors also buy and sell futures contracts in order to earn profits and provide liquidity to the system. However, because of the financial leverage provided to traders by the exchange, commodity futures traders face a substantial risk.