scholarly journals Commodity Futures-an Indian Experience

2009 ◽  
Vol 8 (2) ◽  
pp. 24-39
Author(s):  
G. Prahlad Chowdri
Keyword(s):  
Comparative Study ◽  
Stock Exchange ◽  
Futures Market ◽  
Commodity Futures ◽  
Historical Background ◽  
Indian Government ◽  
Futures Trading ◽  
Indian Experience ◽  
The Government

The policy liberalization by the Indian government to allow futures trading in commodities in 2003, after prolonged deliberations on this demand, has thrown open several opportunities and challenges. This paper intends focussing on the historical background and present scenario of the commodity futures market in India. This paper also focuses on the policy aspects initiated by the government in commodity futures market in India. The performances of Commodity exchanges in India and a comparative study with Stock exchange proves the direction of commodity futures trading.

scholarly journals Brokers and brokerage in the process of trading in commodity futures markets

2003 ◽  
Vol 44 (159) ◽  
pp. 63-94 ◽  
Author(s):  
Milan Eremic
Keyword(s):  
Futures Markets ◽  
Stock Exchange ◽  
Futures Market ◽  
Commodity Futures ◽  
Necessary Condition ◽  
Clearing House ◽  
Futures Trading ◽  
Whole Process ◽  
Commodity Futures Markets ◽  
Contractual Obligations

This paper mainly deals with the analysis of a very complex process of brokerage in commodity futures markets. Unlike a classical commodity market in which brokers are not a necessity, sales and purchases in commodity futures markets cannot be carried out without brokers. Brokers who act as agents of buyers and sellers of futures are a necessary condition for trading in organized markets, such as commodity futures markets. The structure of brokers in futures trading is multilayer and involves participants in futures trading from floor brokers, immediate futures traders and the members of clearing and the clearing house itself, on the one hand, to numerous other necessary actors whose activities out of the stock exchange and the clearing house contribute to the efficient functioning of futures market. The fact that transactions between buyers and sellers in futures markets are not carried out directly but through brokers means that the obligations of buyers and sellers are formally conveyed to brokers, providing at the same time the guarantee by the broker that the actual buyer and the actual seller will fulfill their contractual obligations. At the very beginning of futures trading, the relationship between the seller and the buyer is transformed into a relationship between two brokers. Since that moment on, the original relationship is conveyed to higher levels of brokerage reaching the level of the clearing house. In the process of transformation of the buyer-seller relationship and transmitting obligations and guaranteeing their fulfillment, the clearing house itself becomes the buyer relative to all sellers and the seller relative to all buyers. In this way, it guarantees that obligations regarding all transactions in futures market will be fulfilled. The whole process is carried out in accordance with the prescribed procedures conducted on the floor of commodity exchange, in its administrative departments and in the clearing house itself.

Marketing of Agricultural Commodities in India

2020 ◽  
pp. 1335-1357
Author(s):  
Rakhi Arora
Keyword(s):  
National Level ◽  
Marketing Mix ◽  
Commodity Futures ◽  
Commodity Market ◽  
Agricultural Commodities ◽  
Futures Trading ◽  
Commodity Exchange ◽  
Spot Prices ◽  
The Government

Commodity market is a fast paced dynamic market with liquidity and Commodity Exchange providing a platform for trading in various agri and non agri commodities at nationalized exchanges for discovering the price of agricultural goods in India since 2003. This also provides an opportunity to farmers, manufacturers or individuals for hedging and arbitrage to minimizes the losses due to fluctuations in the futures as well as spot prices. Though the Government has taken many steps time to time to control the prices of listed commodities by imposing restrictions like imposing daily margin limits and banning futures trading in speculative commodity/commodities if required but it is still being questioned. This chapter emphasizes on the working of the National Level Commodity Exchanges in India in general, the share of major agricultural commodities traded across National Level Commodity Exchanges in India, the marketing mix for agricultural commodities in India and the benefits and challenges of commodity futures derivatives for investors in India.

Marketing of Agricultural Commodities in India

2017 ◽  
pp. 185-212
Author(s):  
Rakhi Arora
Keyword(s):  
National Level ◽  
Marketing Mix ◽  
Commodity Futures ◽  
Commodity Market ◽  
Agricultural Commodities ◽  
Futures Trading ◽  
Commodity Exchange ◽  
Spot Prices ◽  
The Government

Commodity market is a fast paced dynamic market with liquidity and Commodity Exchange providing a platform for trading in various agri and non agri commodities at nationalized exchanges for discovering the price of agricultural goods in India since 2003. This also provides an opportunity to farmers, manufacturers or individuals for hedging and arbitrage to minimizes the losses due to fluctuations in the futures as well as spot prices. Though the Government has taken many steps time to time to control the prices of listed commodities by imposing restrictions like imposing daily margin limits and banning futures trading in speculative commodity/commodities if required but it is still being questioned. This chapter emphasizes on the working of the National Level Commodity Exchanges in India in general, the share of major agricultural commodities traded across National Level Commodity Exchanges in India, the marketing mix for agricultural commodities in India and the benefits and challenges of commodity futures derivatives for investors in India.

Empirical Investigation on Food Inflation and Efficiency Issues in Indian Agri-futures Market

2017 ◽  
Vol 3 (2) ◽  
pp. 156-165 ◽  
Author(s):  
Narinder Pal Singh ◽  
Archana Singh
Keyword(s):  
Trading Volume ◽  
Wholesale Price ◽  
Time Frame ◽  
Futures Market ◽  
Sufficient Evidence ◽  
Futures Trading ◽  
Causality Test ◽  
Short Period ◽  
The Government ◽  
Food Inflation

In early 2007, the Government of India (GoI) banned futures trading on some essential agro-commodities such as wheat, rice, and two varieties of lentils due to rising food inflation. However, futures trading in agri-commodities such as chana (chickpea), soy oil, rubber, and potato were temporarily suspended. Professor Abhijit Sen’s committee, constituted to study the relationship between futures trading and agricultural commodities inflation, did not find sufficient evidence of inflationary impact of futures trading in India due to too short period of commodity futures trading. Also, an efficient futures market is required for the producers, traders, and consumers to hedge their price risk. Thus, in this study, we analyze the market efficiency of agricultural futures market and the effect of futures trading on inflation with special reference to chana (chickpea) market in India. This study is for a time frame of 10 years from 2005–2014. The data on closing prices of chana in futures and spot markets and futures trading volume has been collected from National Commodity and Derivatives Exchange, and chana wholesale price index (WPI) monthly data from Office of the Economic Adviser, GoI. The collected data is analyzed for efficiency using Johansen cointegration approach and vector error correction (VEC) restrictions and inflationary effect using Toda Yamamoto (TY) version of Granger causality test. From the results, we find that the spot and futures prices for chana are cointegrated and unbiased, that is, the chana (chickpea) futures market is efficient. But, the futures trading of chana has inflationary impact, that is, futures trading volume of chana affects chana WPI. This research has got direct implications for government and market participants. India is the largest consumer of chana (chickpea)—the third most important pulse crop produced in the world. Thus, the inflationary impact of chana futures trading is a matter of concern for GoI.

scholarly journals URGENSI PENGATURAN UNDANG-UNDANG PASAR FISIK ASET KRIPTO (CRYPTO ASSET)

2021 ◽  
Vol 13 (1) ◽  
pp. 1-15
Author(s):  
Hans Christoper Krisnawangsa ◽  
Christian Tarapul Anjur Hasiholan ◽  
Made Dharma Aditya Adhyaksa ◽  
Lourenthya Fleurette Maspaitella
Keyword(s):  
Futures Market ◽  
Legal Issues ◽  
Commodity Futures ◽  
Futures Contracts ◽  
Legal Basis ◽  
Legal Certainty ◽  
Futures Trading ◽  
Commodity Trading ◽  
Laws And Regulations ◽  
Alternative Investment

Crypto Assets is a new alternative investment concept in Indonesia. The legal basis for regulating crypto assets currently in force in Indonesia cannot accommodate the development of the Crypto assets concept which continues to undergo significant changes. The physical market for crypto assets is incompatible when regulated by the provisions of Law Number 32 of 1997 on commodity futures trading and its amendments, namely Law Number 10 of 2011 because the physical market has conceptual differences with the provisions of the futures market in general. The object traded in the physical market is the commodity, while in the commodity futures market the object is futures contracts (and their derivatives) for commodities traded in the physical market. The scope of the commodity futures market as regulated in Article 1 of the Commodity Futures Trading Law does not accommodate commodity trading in the physical market. The urgency of regulating the physical market for crypto assets with a separate law is the implementation of the principle of legal certainty and protection of crypto asset investors. The method used in writing this journal is normative research using books, journal references, and laws and regulations that are relevant to the legal issues in this study. The results of this study indicate that the regulation of the physical law on crypto assets is needed because crypto assets should be regulated into two separate arrangements so that it is not appropriate if the regulation regarding crypto assets is only accommodated by the Commodity Futures Trading Law.

Commodity Futures Trading Commission issues advisory for virtual currency pump-and-dump schemes

2018 ◽  
Vol 19 (3) ◽  
pp. 42-44 ◽  
Author(s):  
Richard Rosenfeld ◽  
Alex Lakatos ◽  
David Beam ◽  
Jennifer Carlson ◽  
Nina Flax ◽  
...  
Keyword(s):  
Financial Services ◽  
Commodity Futures ◽  
Futures Trading ◽  
Virtual Currency ◽  
Content Type ◽  
Market Participants ◽  
Social Media Platforms ◽  
Practical Guidance ◽  
Precautionary Measures ◽  
The Government

Purpose The purpose of this paper is to explain innocent actors in the virtual currency space (e.g. virtual currency exchanges, financial institutions, social media platforms) and how to avoid potential exposure because of the misconduct of users or customers. Design/methodology/approach Explains how pump-and-dump securities and commodities fraud schemes work, explains the Commodity Futures Trading Commission’s warning to consumers about how to avoid being victimized by schemers running pump-and-dump schemes in the virtual currency space, explains how innocent well-meaning actors may – because of misconduct by their customers or users – be at risk of exposure to victims of pump-and-dump schemes and provides practical guidance for avoiding these dangers and remediating problems. Findings Market participants must protect their reputations, and they cannot rely on the government to do so for them. Moreover, because investors who fall prey to fraud may be unable to recover from fraudsters, such investors may seek to recover from innocent market participants. Accordingly, market participants should take precautionary measures to avoid being used by fraudsters. Originality/value Practical guidance from experienced securities and financial services litigators.

scholarly journals Perdagangan Berjangka Komoditi : Berdzikirlah dengan Physical Delivery

El Dinar ◽  
2018 ◽  
Vol 5 (2) ◽  
pp. 44
Author(s):  
Bambang Tutuko
Keyword(s):  
Risk Sharing ◽  
Commodity Futures ◽  
Futures Contracts ◽  
Futures Trading ◽  
Market Participants ◽  
Ownership Transfer ◽  
Trading Activities ◽  
The Government ◽  
Commodity Trading ◽  
The One

<p>Commodity Futures Trading in Indonesia is administered by the government under the auspices of the Commodity Futures Trading Supervisory Agency (BAPPEBTI) with the aim of establishing the price of primary commodities (price discovery) and as a hedging facility using futures contracts. However, current futures trading is only a means of speculation caused by its specifications and transaction mechanism.<br />The application of the three principles of dhikr: the principle of harmony, the principle of integrity, and the principle of one on the quest for hedging solutions in commodity futures will lead to trade where the parties who transact share the risk (risk sharing). Risk sharing can only occur if there is a common goal between buyers and sellers to manage risk (the principle of the one-an). The similarity of objectives will result in a commitment between buyers and sellers to perform physical handover backed by regulation to create a liquid market (the principle of harmony), so that the wholeness of trade mechanisms involving market participants, markets, and regulators will be maintained. The integrity of the role of the stakeholders of commodity trading is what will lead to the solution of the hedge without having to separate the risk with its trading activities (principle of wholeness).<br />The "dhikr" hedging is a hedge accompanied by the certainty of ownership transfer through physical delivery of physical commodities. Thus, the hedge is not separate from its real trading activity, because the risk is always attached to the profit-making business activity.</p>

THE IMPACT OF COMMODITY TRANSACTION TAX ON FUTURES TRADING IN INDIA: AN EX-ANTE ANALYSIS

2011 ◽  
Vol 56 (03) ◽  
pp. 423-440 ◽  
Author(s):  
PRAVAKAR SAHOO ◽  
RAJIV KUMAR
Keyword(s):  
Transaction Cost ◽  
Structural Model ◽  
Negative Relationship ◽  
Trading Activity ◽  
Indian Government ◽  
Futures Trading ◽  
Commodity Derivatives ◽  
The Government ◽  
Transaction Tax ◽  
The Impact

Trading in commodity derivatives on exchange platforms is an instrument to achieve price discovery and better price-risk management besides helping the macroeconomy with better resource allocation. In the 2008–2009 budget, the Indian government proposed to impose a commodity transaction tax (CTT) amounting to 0.017% of trading value. In this context, we examine the relationship between trading activity, volatility and transaction cost for five most traded commodities in India. Results suggest that there exists a negative relationship between transaction cost and liquidity and a positive relationship between transaction cost and volatility. Further, the results of structural model support the results of VAR analysis. Therefore, if the government imposes CTT, it would lead to higher volatility and lower trading activity affecting market efficiency and liquidity.

scholarly journals The system of margins and the clearing house in the system of commodity futures markets

2004 ◽  
Vol 44 (161) ◽  
pp. 63-100
Author(s):  
Milan Eremic
Keyword(s):  
Futures Markets ◽  
Stock Exchange ◽  
Futures Market ◽  
Commodity Futures ◽  
Clearing House ◽  
Trading System ◽  
Hedging Strategies ◽  
Total Capital ◽  
Commodity Futures Markets ◽  
Capital Value

In a commodity futures trading system, the clearing house is of great importance. This paper describes and analyses in detail its essence functions and numerous activities. The main goal and a major task of such activities is to preserve financial integrity and stability of the market place. Clearing houses accomplish this task by means of a financial safeguard system of the futures markets. In order to preserve financial integrity and stability of the commodity futures markets, the clearing house uses three mechanisms. First, the membership in a clearing corporation requires a certain business and professional profile of a firm or an individual member accompanied by a minimal amount of capital determined by special regulations of a clearing corporation and the stock exchange. Second, the clearing house provides a financial safeguard through self-insurance schemes: funded and unfounded ones. Third, the clearing house uses a developed system and mechanism of margins through which it most efficiently exerts permanent control and sustains financial stability of the trading system as a whole. The third system of preserving financial integrity and stability of commodity futures markets is undoubtedly of the greatest importance, as it simultaneously embodies the true nature and essence of commodity futures markets. The development of margin system in commodity futures market has been a long process through which the clearing house has become a general partner and a guarantee of all stock exchange transactions. As a general partner the clearing house embodies the total amount of capital on the stock exchange. In this way, the system of margins appears to be acting not only as an element of the commodity market financial safeguard, but also to have a completely new function, that of imposing capital as a homeostatic subject which maintains its total capital value. The preservation of the total capital value flowing into the commodity futures market is the first and the basic function of the system of margins. However, it has an additional function: to guarantee historical cost of the goods, thereby maintaining the value of individual capitals, the function which is accomplished through various hedging strategies of individual capital.

scholarly journals Volatility Spillover In Stock And Commodity Futures Market: Empirical Analysis In Indonesia’s Financial Market

2018 ◽  
Vol 22 (2) ◽  
pp. 263
Author(s):  
Siti Saadah
Keyword(s):  
Empirical Analysis ◽  
Financial Market ◽  
Important Implication ◽  
Stock Exchange ◽  
Futures Market ◽  
Commodity Futures ◽  
Stock Index ◽  
Volatility Spillover ◽  
Estimation Result ◽  
Investment Portfolio

Volatility spillover between stock markets causes insignificancy of diversification. Therefore, other investment alternatives is required to build an optimal portfolio, one of them being commodity futures. The low correlation between commodity futures and stocks indicates the advantage of diversification in investment portfolio containing both assets. In order to prove the advantage of diversification, author tested the existence of volatility spillover during September 16, 2010 - September 30, 2015. Estimation result using GARCH method indicates the presence of significant volatility spillover from stock exchange to commodity futures exchange. An important implication of this finding is that if the sectoral stock index and commodity futures are incorporated into an investment portfolio, the investor will not have optimal diversification advantage. This is because there is a correlation between performance of both markets as a result of both markets having the same characteristics in response to the shock that is coming.

Sign in / Sign up

Export Citation Format

Share Document