INDEX

Chapter No Topic Page No.

1 Introduction to Commodity Market 04
2 History of Evolution of Commodity Markets 08
3 India and the Commodity Market 10
4 International Commodity Exchanges 15
5 How Commodity Market Works? 17
6 How to Invest in a Commodity Market 19
7 Current Scenario in Indian Commodity Market 23
8 Commodities 28
9 Analysis 38
ANNAXTURE 47
Summary 55
Bibliography 56

1
 EXECUTIVE SUMMARY

This decade is termed as Decade of Commodities. Prices of all commodities are heading

northwards due to rapid increase in demand for commodities. Developing countries like

China are voraciously consuming the commodities. That’s why globally commodity

market is bigger than the stock market.

India is one of the top producers of large number of commodities and also has a long

history of trading in commodities and related derivatives. The Commodities Derivatives

market has seen ups and downs, but seems to have finally arrived now. The market has

made enormous progress in terms of Technology, transparency and trading activity.

Interestingly, this has happened only after the Government protection was removed from

a number of Commodities, and market force was allowed to play their role. This should

act as a major lesson for policy makers in developing countries, that pricing and price risk

management should be left to the market forces rather than trying to achieve these

through administered price mechanisms. The management of price risk is going to

assume even greater importance in future with the promotion of free trade and removal of

trade barriers in the world.

As majority of Indian investors are not aware of organized commodity market; their

perception about is of risky to very risky investment. Many of them have wrong

impression about commodity market in their minds. It makes them specious towards

commodity market. Concerned authorities have to take initiative to make commodity

trading process easy and simple. Along with Government efforts NGO’s should come

forward to educate the people about commodity markets and to encourage them to invest

in to it. There is no doubt that in near future commodity market will become Hot spot for

2
Indian farmers rather than spot market. And producers, traders as well as consumers will

be benefited from it. But for this to happen one has to take initiative to standardize and

popularize the Commodity Market.

3
 Chapter 1

Introduction to Commodity Market

What is “Commodity”?

Any product that can be used for commerce or an article of commerce which

is traded on an authorized commodity exchange is known as commodity. The article

should be movable of value, something which is bought or sold and which is produced or

used as the subject or barter or sale. In short commodity includes all kinds of goods.

Indian Forward Contracts (Regulation) Act (FCRA), 1952 defines “goods” as “every kind

of movable property other than actionable claims, money and securities”.

In current situation, all goods and products of agricultural (including

plantation), mineral and fossil origin are allowed for commodity trading recognized

under the FCRA. The national commodity exchanges, recognized by the Central

Government, permits commodities which include precious (gold and silver) and non-

ferrous metals, cereals and pulses, ginned and un-ginned cotton, oilseeds, oils and

oilcakes, raw jute and jute goods, sugar and gur, potatoes and onions, coffee and tea,

rubber and spices. Etc.

4
What is a commodity exchange?

A commodity exchange is an association or a company or any other body

corporate organizing futures trading in commodities for which license has been granted

by regulating authority.

What is Commodity Futures?

A Commodity futures is an agreement between two parties to buy or sell a

specified and standardized quantity of a commodity at a certain time in future at a price

agreed upon at the time of entering into the contract on the commodity futures exchange.

The need for a futures market arises mainly due to the hedging function that it

can perform. Commodity markets, like any other financial instrument, involve risk

associated with frequent price volatility. The loss due to price volatility can be attributed

to the following reasons:

Consumer Preferences: - In the short-term, their influence on price volatility is small

since it is a slow process permitting manufacturers, dealers and wholesalers to adjust their

inventory in advance.

Changes in supply: - They are abrupt and unpredictable bringing about wild fluctuations

in prices. This can especially noticed in agricultural commodities where the weather

plays a major role in affecting the fortunes of people involved in this industry. The

futures market has evolved to neutralize such risks through a mechanism; namely

hedging.

5
The objectives of Commodity futures: -

 Hedging with the objective of transferring risk related to the possession of

physical assets through any adverse moments in price. Liquidity and Price

discovery to ensure base minimum volume in trading of a commodity through

market information and demand supply factors that facilitates a regular and

authentic price discovery mechanism.

 Maintaining buffer stock and better allocation of resources as it augments

reduction in inventory requirement and thus the exposure to risks related with

price fluctuation declines. Resources can thus be diversified for investments.

 Price stabilization along with balancing demand and supply position. Futures

trading leads to predictability in assessing the domestic prices, which maintains

stability, thus safeguarding against any short term adverse price movements.

Liquidity in Contracts of the commodities traded also ensures in maintaining the

equilibrium between demand and supply.

 Flexibility, certainty and transparency in purchasing commodities facilitate bank

financing. Predictability in prices of commodity would lead to stability, which in

turn would eliminate the risks associated with running the business of trading

commodities. This would make funding easier and less stringent for banks to

commodity market players.

6
Benefits of Commodity Futures Markets:-

The primary objectives of any futures exchange are authentic price discovery and

an efficient price risk management. The beneficiaries include those who trade in the

commodities being offered in the exchange as well as those who have nothing to do with

futures trading. It is because of price discovery and risk management through the

existence of futures exchanges that a lot of businesses and services are able to function

smoothly.

1. Price Discovery:-Based on inputs regarding specific market information, the

demand and supply equilibrium, weather forecasts, expert views and comments,

inflation rates, Government policies, market dynamics, hopes and fears, buyers

and sellers conduct trading at futures exchanges. This transforms in to continuous

price discovery mechanism. The execution of trade between buyers and sellers

leads to assessment of fair value of a particular commodity that is immediately

disseminated on the trading terminal.

2. Price Risk Management: - Hedging is the most common method of price risk

management. It is strategy of offering price risk that is inherent in spot market by

taking an equal but opposite position in the futures market. Futures markets are

used as a mode by hedgers to protect their business from adverse price change.

This could dent the profitability of their business. Hedging benefits who are

involved in trading of commodities like farmers, processors, merchandisers,

manufacturers, exporters, importers etc.

7
3. Import- Export competitiveness: - The exporters can hedge their price risk and

improve their competitiveness by making use of futures market. A majority of

traders which are involved in physical trade internationally intend to buy

forwards. The purchases made from the physical market might expose them to the

risk of price risk resulting to losses. The existence of futures market would allow

the exporters to hedge their proposed purchase by temporarily substituting for

actual purchase till the time is ripe to buy in physical market. In the absence of

futures market it will be meticulous, time consuming and costly physical

transactions.

4. Predictable Pricing: - The demand for certain commodities is highly price

elastic. The manufacturers have to ensure that the prices should be stable in order

to protect their market share with the free entry of imports. Futures contracts will

enable predictability in domestic prices. The manufacturers can, as a result,

smooth out the influence of changes in their input prices very easily. With no

futures market, the manufacturer can be caught between severe short-term price

movements of oils and necessity to maintain price stability, which could only be

possible through sufficient financial reserves that could otherwise be utilized for

making other profitable investments.

5. Benefits for farmers/Agriculturalists: - Price instability has a direct bearing on

farmers in the absence of futures market. There would be no need to have large

reserves to cover against unfavorable price fluctuations. This would reduce the

8
 risk premiums associated with the marketing or processing margins enabling more

returns on produce. Storing more and being more active in the markets. The price

information accessible to the farmers determines the extent to which

traders/processors increase price to them. Since one of the objectives of futures

exchange is to make available these prices as far as possible, it is very likely to

benefit the farmers. Also, due to the time lag between planning and production,

the market-determined price information disseminated by futures exchanges

would be crucial for their production decisions.

6. Credit accessibility: - The absence of proper risk management tools would

attract the marketing and processing of commodities to high-risk exposure making

it risky business activity to fund. Even a small movement in prices can eat up a

huge proportion of capital owned by traders, at times making it virtually

impossible to payback the loan. There is a high degree of reluctance among banks

to fund commodity traders, especially those who do not manage price risks. If in

case they do, the interest rate is likely to be high and terms and conditions very

stringent. This posses a huge obstacle in the smooth functioning and competition

of commodities market. Hedging, which is possible through futures markets,

would cut down the discount rate in commodity lending.

7. Improved product quality: - The existence of warehouses for facilitating

delivery with grading facilities along with other related benefits provides a very

strong reason to upgrade and enhance the quality of the commodity to grade that

9
is acceptable by the exchange. It ensures uniform standardization of commodity

trade, including the terms of quality standard: the quality certificates that are

issued by the exchange-certified warehouses have the potential to become the

norm for physical trade.

10
History of Evolution of commodity markets

Commodities future trading was evolved from need of assured continuous

supply of seasonal agricultural crops. The concept of organized trading in commodities

evolved in Chicago, in 1848. But one can trace its roots in Japan. In Japan merchants

used to store Rice in warehouses for future use. To raise cash warehouse holders sold

receipts against the stored rice. These were known as “rice tickets”. Eventually, these rice

tickets become accepted as a kind of commercial currency. Latter on rules came in to

being, to standardize the trading in rice tickets. In 19th century Chicago in United States

had emerged as a major commercial hub. So that wheat producers from Mid-west

attracted here to sell their produce to dealers & distributors. Due to lack of organized

storage facilities, absence of uniform weighing & grading mechanisms producers often

confined to the mercy of dealers discretion. These situations lead to need of establishing a

common meeting place for farmers and dealers to transact in spot grain to deliver wheat

and receive cash in return.

Gradually sellers & buyers started making commitments to exchange the produce

for cash in future and thus contract for “futures trading” evolved. Whereby the producer

would agree to sell his produce to the buyer at a future delivery date at an agreed upon

price. In this way producer was aware of what price he would fetch for his produce and

dealer would know about his cost involved, in advance. This kind of agreement proved

beneficial to both of them. As if dealer is not interested in taking delivery of the produce,

he could sell his contract to someone who needs the same. Similarly producer who not

intended to deliver his produce to dealer could pass on the same responsibility to

11
someone else. The price of such contract would dependent on the price movements in

the wheat market. Latter on by making some modifications these contracts transformed in

to an instrument to protect involved parties against adverse factors such as unexpected

price movements and unfavorable climatic factors. This promoted traders entry in futures

market, which had no intentions to buy or sell wheat but would purely speculate on price

movements in market to earn profit.

Trading of wheat in futures became very profitable which encouraged the entry

of other commodities in futures market. This created a platform for establishment of a

body to regulate and supervise these contracts. That’s why Chicago Board of Trade

(CBOT) was established in 1848. In 1870 and 1880s the New York Coffee, Cotton and

Produce Exchanges were born. Agricultural commodities were mostly traded but as long

as there are buyers and sellers, any commodity can be traded. In 1872, a group of

Manhattan dairy merchants got together to bring chaotic condition in New York market

to a system in terms of storage, pricing, and transfer of agricultural products. In 1933,

during the Great Depression, the Commodity Exchange, Inc. was established in New

York through the merger of four small exchanges – the National Metal Exchange, the

Rubber Exchange of New York, the National Raw Silk Exchange, and the New York

Hide Exchange.

The largest commodity exchange in USA is Chicago Board of Trade, The

Chicago Mercantile Exchange, the New York Mercantile Exchange, the New York

Commodity Exchange and New York Coffee, sugar and cocoa Exchange. Worldwide

there are major futures trading exchanges in over twenty countries including Canada,

England, India, France, Singapore, Japan, Australia and New Zealand.

12
India and the commodity market

History of Commodity Market in India:-

The history of organized commodity derivatives in India goes back to the

nineteenth century when Cotton Trade Association started futures trading in 1875, about

a decade after they started in Chicago. Over the time datives market developed in several

commodities in India. Following Cotton, derivatives trading started in oilseed in Bombay

(1900), raw jute and jute goods in Calcutta (1912), Wheat in Hapur (1913) and Bullion in

Bombay (1920).

However many feared that derivatives fuelled unnecessary speculation and

were detrimental to the healthy functioning of the market for the underlying

commodities, resulting in to banning of commodity options trading and cash settlement

of commodities futures after independence in 1952. The parliament passed the Forward

Contracts (Regulation) Act, 1952, which regulated contracts in Commodities all over the

India. The act prohibited options trading in Goods along with cash settlement of forward

trades, rendering a crushing blow to the commodity derivatives market. Under the act

only those associations/exchanges, which are granted reorganization from the

Government, are allowed to organize forward trading in regulated commodities. The act

envisages three tire regulations: (i) Exchange which organizes forward trading in

commodities can regulate trading on day-to-day basis; (ii) Forward Markets Commission

provides regulatory oversight under the powers delegated to it by the central

Government. (iii) The Central Government- Department of Consumer Affairs, Ministry

of Consumer Affairs, Food and Public Distribution- is the ultimate regulatory authority.

13
 The commodities future market remained dismantled and remained dormant

for about four decades until the new millennium when the Government, in a complete

change in a policy, started actively encouraging commodity market. After Liberalization

and Globalization in 1990, the Government set up a committee (1993) to examine the

role of futures trading. The Committee (headed by Prof. K.N. Kabra) recommended

allowing futures trading in 17 commodity groups. It also recommended strengthening

Forward Markets Commission, and certain amendments to Forward Contracts

(Regulation) Act 1952, particularly allowing option trading in goods and registration of

brokers with Forward Markets Commission. The Government accepted most of these

recommendations and futures’ trading was permitted in all recommended commodities. It

is timely decision since internationally the commodity cycle is on upswing and the next

decade being touched as the decade of Commodities.

Commodity exchange in India plays an important role where the prices of any

commodity are not fixed, in an organized way. Earlier only the buyer of produce and its

seller in the market judged upon the prices. Others never had a say.

Today, commodity exchanges are purely speculative in nature. Before

discovering the price, they reach to the producers, end-users, and even the retail

investors, at a grassroots level. It brings a price transparency and risk management in the

vital market. A big difference between a typical auction, where a single auctioneer

announces the bids and the Exchange is that people are not only competing to buy but

also to sell. By Exchange rules and by law, no one can bid under a higher bid, and no one

can offer to sell higher than someone else’s lower offer. That keeps the market as

efficient as possible, and keeps the traders on their toes to make sure no one gets the

14
purchase or sale before they do. Since 2002, the commodities future market in India has

experienced an unexpected boom in terms of modern exchanges, number of commodities

allowed for derivatives trading as well as the value of futures trading in commodities,

which crossed $ 1 trillion mark in 2006. Since 1952 till 2002 commodity datives market

was virtually non- existent, except some negligible activities on OTC basis.

In India there are 25 recognized future exchanges, of which there are three

national level multi-commodity exchanges. After a gap of almost three decades,

Government of India has allowed forward transactions in commodities through Online

Commodity Exchanges, a modification of traditional business known as Adhat and

Vayda Vyapar to facilitate better risk coverage and delivery of commodities. The three

exchanges are: National Commodity & Derivatives Exchange Limited (NCDEX)

Mumbai, Multi Commodity Exchange of India Limited (MCX) Mumbai and National

Multi-Commodity Exchange of India Limited (NMCEIL) Ahmedabad.There are other

regional commodity exchanges situated in different parts of India.

Legal framework for regulating commodity futures in India:-

The commodity futures traded in commodity exchanges are regulated by the

Government under the Forward Contracts Regulations Act, 1952 and the Rules framed

there under. The regulator for the commodities trading is the Forward Markets

Commission, situated at Mumbai, which comes under the Ministry of Consumer Affairs

Food and Public Distribution

15
Forward Markets Commission (FMC):-

It is statutory institution set up in 1953 under Forward Contracts (Regulation)

Act, 1952. Commission consists of minimum two and maximum four members appointed

by Central Govt. Out of these members there is one nominated chairman. All the

exchanges have been set up under overall control of Forward Market Commission (FMC)

of Government of India.

National Commodities & Derivatives Exchange Limited (NCDEX)

National Commodities & Derivatives Exchange Limited (NCDEX)

promoted by ICICI Bank Limited (ICICI Bank), Life Insurance Corporation of India

(LIC), National Bank of Agriculture and Rural Development (NABARD) and National

Stock Exchange of India Limited (NSC). Punjab National Bank (PNB), Credit Ratting

Information Service of India Limited (CRISIL), Indian Farmers Fertilizer Cooperative

Limited (IFFCO), Canara Bank and Goldman Sachs by subscribing to the equity shares

have joined the promoters as a share holder of exchange. NCDEX is the only Commodity

Exchange in the country promoted by national level institutions.

NCDEX is a public limited company incorporated on 23 April 2003.

NCDEX is a national level technology driven on line Commodity Exchange with an

independent Board of Directors and professionals not having any vested interest in

Commodity Markets.

It is committed to provide a world class commodity exchange platform for market

participants to trade in a wide spectrum of commodity derivatives driven by best global

practices, professionalism and transparency.

16
 NCDEX is regulated by Forward Markets Commission (FMC). NCDEX is

also subjected to the various laws of land like the Companies Act, Stamp Act, Contracts

Act, Forward Contracts Regulation Act and various other legislations.

NCDEX is located in Mumbai and offers facilities to its members in more

than 550 centers through out India. NCDEX currently facilitates trading of 57

commodities.

Commodities Traded at NCDEX:-

 Bullion:-

Gold KG, Silver, Brent

 Minerals:-

Electrolytic Copper Cathode, Aluminum Ingot, Nickel

Cathode, Zinc Metal Ingot, Mild steel Ingots

 Oil and Oil seeds:-

Cotton seed, Oil cake, Crude Palm Oil, Groundnut (in shell),

Groundnut expeller Oil, Cotton, Mentha oil, RBD Pamolein, RM

seed oil cake, Refined soya oil, Rape seeds, Mustard seeds,

Caster seed, Yellow soybean, Meal

 Pulses:-

Urad, Yellow peas, Chana, Tur, Masoor,

 Grain:-

Wheat, Indian Pusa Basmati Rice, Indian parboiled Rice (IR-

36/IR-64), Indian raw Rice (ParmalPR-106), Barley, Yellow

17
 red maize

 Spices:-

Jeera, Turmeric, Pepper

 Plantation:-

Cashew, Coffee Arabica, Coffee Robusta

 Fibers and other:-

Guar Gum, Guar seeds, Guar, Jute sacking bags, Indian 28

mm cotton, Indian 31mm cotton, Lemon, Grain Bold, Medium

Staple, Mulberry, Green Cottons, , , Potato, Raw Jute,

Mulberry raw Silk, V-797 Kapas, Sugar, Chilli LCA334

 Energy:-

Crude Oil, Furnace oil

Multi Commodity Exchange of India Limited (MCX)

Multi Commodity Exchange of India Limited (MCX) is an independent and de-

mutulized exchange with permanent reorganization from Government of India, having

Head Quarter in Mumbai. Key share holders of MCX are Financial Technologies (India)

Limited, State Bank of India, Union Bank of India, Corporation Bank of India, Bank of

India and Cnnara Bank. MCX facilitates online trading, clearing and settlement

operations for commodity futures market across the country.

MCX started of trade in Nov 2003 and has built strategic alliance with Bombay

Bullion Association, Bombay Metal Exchange, Solvent Extractors Association of India,

pulses Importers Association and Shetkari Sanghatana.

18
 MCX deals wit about 100 commodities.

Commodities Traded at MCX:-

 Bullion:-

Gold, Silver, Silver Coins,

 Minerals:-

Aluminum, Copper, Nickel, Iron/steel, Tin, Zinc, Lead

 Oil and Oil seeds:-

Castor oil/castor seeds, Crude Palm oil/ RBD Pamolein, Groundnut oil,

Mustard/ Rapeseed oil, Soy seeds/Soy meal/Refined Soy Oil, Coconut Oil

Cake, Copra, Sunflower oil, Sunflower Oil cake, Tamarind seed oil,

 Pulses:-

Chana, Masur, Tur, Urad, Yellow peas

 Grains:-

Rice/ Basmati Rice, Wheat, Maize, Bajara, Barley,

 Spices:-

Pepper, Red Chili, Jeera, Cardamom, Cinnamon, Clove,

Ginger,

 Plantation:-

Cashew Kernel, Rubber, Areca nut, Betel nuts, Coconut,

Coffee,

 Fiber and others:-

Kapas, Kapas Khalli, Cotton (long staple, medium staple,

19
 short staple), Cotton Cloth, Cotton Yarn, Gaur seed and

Guargum, Gur and Sugar, Khandsari, Mentha Oil, Potato, Art

Silk Yarn, Chara or Berseem, Raw Jute, Jute Goods, Jute

Sacking,

 Petrochemicals:-

High Density Polyethylene (HDPE), Polypropylene (PP), Poly

Vinyl Chloride (PVC)

 Energy:-

Brent Crude Oil, Crude Oil, Furnace Oil, Middle East Sour

Crude Oil, Natural Gas

National Multi Commodity Exchange of India Limited (NMCEIL)

National Multi Commodity Exchange of India Limited (NMCEIL) is the

first de-mutualised Electronic Multi Commodity Exchange in India. On 25 th July

2001 it was granted approval by Government to organize trading in edible oil

complex. It is being supported by Central warehousing Corporation Limited,

Gujarat State Agricultural Marketing Board and Neptune Overseas Limited. It got

reorganization in Oct 2002. NMCEIL Head Quarter is at Ahmedabad.

20
 INTERNATIONAL COMMODITY EXCHANGES

Futures’ trading is a result of solution to a problem related to the maintenance

of a year round supply of commodities/ products that are seasonal as is the case of

agricultural produce. The United States, Japan, United Kingdom, Brazil, Australia,

Singapore are homes to leading commodity futures exchanges in the world.

The New York Mercantile Exchange (NYMEX):-

The New York Mercantile Exchange is the world’s biggest exchange for

trading in physical commodity futures. It is a primary trading forum for energy products

and precious metals. The exchange is in existence since last 132 years and performs

trades trough two divisions, the NYMEX division, which deals in energy and platinum

and the COMEX division, which trades in all the other metals.

Commodities traded: - Light sweet crude oil, Natural Gas, Heating Oil, Gasoline,

RBOB Gasoline, Electricity Propane, Gold, Silver, Copper, Aluminum, Platinum,

Palladium, etc.

London Metal Exchange:-

The London Metal Exchange (LME) is the world’s premier non-ferrous

market, with highly liquid contracts. The exchange was formed in 1877 as a direct

consequence of the industrial revolution witnessed in the 19 th century. The primary focus

of LME is in providing a market for participants from non-ferrous based metals related

industry to safeguard against risk due to movement in base metal prices and also arrive at

21
a price that sets the benchmark globally. The exchange trades 24 hours a day through an

inter office telephone market and also through a electronic trading platform. It is famous

for its open-outcry trading between ring dealing members that takes place on the market

floor.

Commodities traded:- Aluminum, Copper, Nickel, Lead, Tin, Zinc, Aluminum Alloy,

North American Special Aluminum Alloy (NASAAC), Polypropylene, Linear Low

Density Polyethylene, etc.

The Chicago Board of Trade:-

The first commodity exchange established in the world was the Chicago

Board of Trade (CBOT) during 1848 by group of Chicago merchants who were keen to

establish a central market place for trade. Presently, the Chicago Board of Trade is one

of the leading exchanges in the world for trading futures and options. More than 50

contracts on futures and options are being offered by CBOT currently through open

outcry and/or electronically. CBOT initially dealt only in Agricultural commodities like

corn, wheat, non storable agricultural commodities and non-agricultural products like

gold and silver.

Commodities Traded: - Corn, Soybean, Oil, Soybean meal, Wheat, Oats, Ethanol,

Rough Rice, Gold, Silver etc.

Tokyo Commodity Exchange (TOCOM):-

The Tokyo Commodity Exchange (TOCOM) is the second largest commodity

futures exchange in the world. It trades in to metals and energy contracts. It has made

22
rapid advancement in commodity trading globally since its inception 20 years back. One

of the biggest reasons for that is the initiative TOCOM took towards establishing Asia as

the benchmark for price discovery and risk management in commodities like the Middle

East Crude Oil. TOCOM’s recent tie up with the MCX to explore cooperation and

business opportunities is seen as one of the steps towards providing platform for futures

price discovery in Asia for Asian players in Crude Oil since the demand-supply situation

in U.S. that drives NYMEX is different from demand-supply situation in Asia. In Jan

2003, in a major overhaul of its computerized trading system, TOCOM fortified its

clearing system in June by being first commodity exchange in Japan to introduce an in-

house clearing system. TOCOM launched options on gold futures, the first option

contract in Japanese market, in May 2004.

Commodities traded: - Gasoline, Kerosene, Crude Oil, Gold, Silver, Platinum,

Aluminum, Rubber, etc

Chicago Mercantile Exchange:-

The Chicago Mercantile Exchange (CME) is the largest futures exchange in

the US and the largest futures clearing house in the world for futures and options trading.

Formed in 1898 primarily to trade in Agricultural commodities, the CME introduced the

world’s first financial futures more than 30 years ago. Today it trades heavily in interest

rates futures, stock indices and foreign exchange futures. Its products often serves as a

financial benchmark and witnesses the largest open interest in futures profile of CME

consists of livestock, dairy and forest products and enables small family farms to large

23
Agri-business to manage their price risks. Trading in CME can be done either through pit

trading or electronically.

Commodities Traded: - Butter milk, Diammonium phosphate, Feeder cattle, frozen pork

bellies, Lean Hogs, Live cattle, Non-fat Dry Milk, Urea, Urea Ammonium Nitrate, etc

24
How Commodity market works?

There are two kinds of trades in commodities. The first is the spot trade, in which

one pays cash and carries away the goods. The second is futures trade. The underpinning

for futures is the warehouse receipt. A person deposits certain amount of say, good X in a

ware house and gets a warehouse receipt. Which allows him to ask for physical delivery

of the good from the warehouse. But some one trading in commodity futures need not

necessarily posses such a receipt to strike a deal. A person can buy or sale a commodity

future on an exchange based on his expectation of where the price will go. Futures have

something called an expiry date, by when the buyer or seller either closes (square off) his

account or give/take delivery of the commodity. The broker maintains an account of all

dealing parties in which the daily profit or loss due to changes in the futures price is

recorded. Squiring off is done by taking an opposite contract so that the net outstanding is

nil.

For commodity futures to work, the seller should be able to deposit the

commodity at warehouse nearest to him and collect the warehouse receipt. The buyer

should be able to take physical delivery at a location of his choice on presenting the

warehouse receipt. But at present in India very few warehouses provide delivery for

specific commodities.

Following diagram gives a fair idea about working of the Commodity market.

25
 Today Commodity trading system is fully computerized. Traders need not

visit a commodity market to speculate. With online commodity trading they could sit in

the confines of their home or office and call the shots.

The commodity trading system consists of certain prescribed steps or stages

as follows:

I. Trading: - At this stage the following is the system implemented-

- Order receiving

- Execution

- Matching

- Reporting

- Surveillance

- Price limits

26
 - Position limits

II. Clearing: - This stage has following system in place-

- Matching

- Registration

- Clearing

- Clearing limits

- Notation

- Margining

- Price limits

- Position limits

- Clearing house.

III. Settlement: - This stage has following system followed as follows-

- Marking to market

- Receipts and payments

- Reporting

- Delivery upon expiration or maturity.

27
HOW TO INVEST IN A COMMODITY MARKET?

With whom investor can transact a business?

An investor can transact a business with the approved clearing member of previously

mentioned Commodity Exchanges. The investor can ask for the details from the

Commodity Exchanges about the list of approved members.

What is Identity Proof?

When investor approaches Clearing Member, the member will ask for identity proof.

For which Xerox copy of any one of the following can be given

a) PAN card Number

b) Driving License

c) Vote ID

d) Passport

What statements should be given for Bank Proof?

The front page of Bank Pass Book and a canceled cheque of a concerned bank.

Otherwise the Bank Statement containing details can be given.

What are the particulars to be given for address proof?

28
 In order to ascertain the address of investor, the clearing member will insist on Xerox

copy of Ration card or the Pass Book/ Bank Statement where the address of investor is

given.

What are the other forms to be signed by the investor?

The clearing member will ask the client to sign

a) Know your client form

b) Risk Discloser Document

The above things are only procedure in character and the risk involved and only

after understanding the business, he wants to transact business.

What aspects should be considered while selecting a commodity broker?

While selecting a commodity broker investor should ideally keep certain aspects in

mind to ensure that they are not being missed in any which way. These factors include

 Net worth of the broker of brokerage firm.

 The clientele.

 The number of franchises/branches.

 The market credibility.

 The references.

 The kind of service provided- back office functioning being most important.

 Credit facility.

 The research team.

29
 These are amongst the most important factors to calculate the credibility of

commodity broker.

Broker:-

The Broker is essentially a person of firm that liaisons between individual traders and

the commodity exchange. In other words the Commodity Broker is the member of

Commodity Exchange, having direct connection with the exchange to carry out all trades

legally. He is also known as the authorized dealer.

How to become a Commodity Trader/Broker of Commodity Exchange?

To become a commodity trader one needs to complete certain legal and binding

obligations. There is routine process followed, which is stated by a unit of Government

that lays down the laws and acts with regards to commodity trading. A broker of

Commodities is also required to meet certain obligations to gain such a membership in

exchange.

To become a member of Commodity Exchange the broker of brokerage firm

should have net worth amounting to Rs. 50 Lakh. This sum has been determined by Multi

Commodity Exchange.

How to become a Member of Commodity Exchange?

To become member of Commodity Exchange the person should comply with

the following Eligibility Criteria.

1. He should be Citizen of India.

30
 2. He should have completed 21 years of his age.

3. He should be Graduate or having equivalent qualification.

4. He should not be bankrupt.

5. He has not been debarred from trading in Commodities by statutory/regulatory

authority,

There are following three types of Memberships of Commodity Exchanges.

Trading-cum-Clearing Member (TCM):-

A TCM is entitled to trade on his own account as well as on account of his clients, and

clear and settle trades himself. A sole proprietor, Partnership firm, a joint Hindu

Undivided Family (HUF), a corporate entity, a cooperative society, a public sector

organization or any other Government or non-Government entity can become a TCM.

There are two types of TCM, TCM-1 and TCM-2. TCM-1 refers to

transferable non-deposit based membership and TCM-2 refers to non-transferable deposit

based membership.

A person desired to register as TCM is required to submit an application as per

the format prescribed under the business rules, along with all enclosures, fee and other

documents specified therein. He is required to go through interview by Membership

Admission Committee and committee is also empowered to frame rules or criteria

relating to selection or rejection of a member.

Institutional Trading-cum-clearing Member (ITCM):-

31
 Only an Institution/ Corporate can be admitted by the Exchange as a member,

conferring upon them the right to trade and clear through the clearing house of exchange

as an Institutional Trading-cum-clearing Member (ITCM). The member may be allowed

to make deals for himself as well as on behalf of his clients and clear and settle such

deals. ITCMs can also appoint sub-brokers, authorized persons and Trading Members

who would be registered as trading members.

Professional Clearing Member (PCM):-

A PCM entitled to clear and settle trades executed by other members of the

exchange. A corporate entity and an institution only can apply for PCM. The member

would be allowed to clear and settle trades of such members of the Exchange who choose

to clear and settle their trades through such PCM.

Membership Details for NCDEX:-1

Trading-cum-clearing Member: - TCM

Sr.
Particulars NCDEX: TCM
No.
Interest Free Cash Security
1 15.00 Lakhs
Deposit
2 Collateral Security Deposit 15.00 Lakhs
3 Admission Fee 5.00 Lakhs
4 Annual Membership Fees 0.50 Lakhs
5 Advance Minimum 0.50 Lakhs

1
www.ncdex.com

32
 Transaction Charges
6 Net worth Requirement 50.00 Lakhs

Professional Clearing Membership: - PCM

Sr.
Particulars NCDEX: PCM
No.
Interest Free Cash Security
1 25.00 Lakhs
Deposit
Collateral Security Deposit
2 25.00 Lakhs

Annual Subscription
3 1.00 Lakhs
Charges
Advance Minimum
4 1.00 Lakhs
Transaction Charges
5 Net worth Requirement 5000.00 Lakhs

33
Membership Details for MCX:-2

Initial Net worth Criteria

Admission Annual
Category Security
Fees Subscription Corporate Partnership Individual
Deposit
Rs. 10 Rs. 15 Rs. 50
TCM-1 Rs 50,000 Rs 50 Lakhs Rs. 50 Lakhs
Lakhs Lakhs Lakhs
Rs. 50 Rs. 50 Rs. 50
TCM-2 Rs. 5 Lakhs Rs 50,000 Rs. 50 Lakhs
Lakhs Lakhs Lakhs
Rs. 10 Rs. 50 Rs. 50
ITCM Rs 50,000 N.A. N.A.
Lakhs Lakhs Lakhs
Rs. 50
PCM Nil Rs 1,00,000 Rs. 5Crores N.A. N.A.
Lakhs

Company Profile:

K&A Securities Pvt. Ltd.

2
MCX Certified Commodity Professional Reference Material

34
K&A Securities Pvt. Ltd., a Company registered under the Companies Act, 1956 is a

Member of the National Stock Exchange (NSE) & Bombay Stock Exchange (BSE) of

Cash and F&O Segment, Central Depository Services (I) Ltd. (CDSL) and also a Trading

and Clearing member of the Currency Derivative Segment of NSE.

K&A is a professionally managed group headed by the directors, having vast experience

in the stock market. Besides the core promoters, the group is having its full fledged teams

headed by young and dynamic professionals like chartered accountants, company

secretaries, MBAs, IT professionals etc. to handle the various divisions of the company.

We are fully equipped with all modern infrastructures to carry on its activities. Our

offices are well connected through the VPN, Lease line, ISDN, Internet and other

network facilities. All of its operations are computerized through the advanced

technologies. All offices are ultra modern, hi-tech, well furnished and fully computerized,

driven by the well-qualified professionals.

We have a worldwide vision and it along with its associates is currently providing state of

the art stock broking services through all the major stock exchanges, trading through NSE

& BSE, depository services through CDSL and all the services are available under the

one roof. With its ability to evolve with the changing environment the Company has been

able to put itself to the forefront of stock broking activities. With its network spreading

across various parts of India, it has made a distinct mark among the stock broking houses

and high net worth corporate as well as individuals.

35
Management Profile:

Dr. Mukesh Kansal

Fellow member of "The Institute of Chartered Accountants of India" Fellow member of

"The Institute of the Company Secretaries of India" PhD. on "Stock Exchange and its

significance in India" with case study of DSEA Ltd.

Having more than 15 years of experience in Indian Stock Markets & Financial Services,

being the "Executive Director" and one of the Principal promoters of M/s. K&A

Securities Pvt. Ltd.

Mrs. Sarika Kansal

Bachelor of Arts

Having more than 13 years of experience in Indian Stock Markets & Financial Services,

being the Director and one of the Principal promoter of M/s. K&A Securities Pvt. Ltd.

Mr. Vinay Kumar Gupta

Master of Commerce

Having more than 14 years of experience in Indian Stock Markets & Financial Services,

being the Director M/s. K&A Securities Pvt. Ltd.

Mr. Mayank Goel

Head - Finance

Young & dynamic, professionally qualified Chartered Accountant having10 years

36
experience with Indian and Multinational Companies.

Mr. Sanjay Verma

Sr.Vice President Strategy and operations

An astute and seasoned business architect, with over 25 years of experience, is spanning

across the manufacturing, retail, export and service industry.

Mr. Sumeet Pal Singh

Head - Equity

MCA with 8 years experience of Product Management in financial sector including

HSBC bank.

Mr. Puneet Gupta

Head - Institutional Clients

A Post-Graduate with more than15 years of experience in Banking and Financial

Services Markets.

Mr. Rajiv Kapoor

Head-Commodities

Having 14 years of experience in Financial Service sector including a stint with DBS

Bank of Singapore.

Mr. H.C Arora

Executive -Assistant ToCMD

37
Has professional experience of more than 30 years in India and Abroad. Oversees

administrative functions of the Organization.

Mr. Amit Goel

Head - Compliance

Young & dynamic, professionally qualified Chartered Accountant with more than 5

years experience in Stocks & Commodity Market.

Mr. Hemant Kumar

Head – HR

A qualified MBA in HR & Finance with over 6 years of rich professional experience of

Banking, Finance and IT companies.

Network Locations

One of the fastest growing Financial Services Organizations.

38
Corporate Office A–7, Sector – 4, NOIDA NCR INDIA 201301

Telephone 91 – 120 – 4663330, 4663333

Fax No. 91 – 120 – 4213834

Email ka@kasecurities.com

Website www.kasecurities.com

Achievements

• In 1995 - K&A Securities was registered as Private Limited Company

39
 26th July, 1995 - acquired membership of NSE (National Stock Exchange India
•
Limited).

10th November, 1995 - acquired membership of DSE (Delhi Stock Exchange

•
Association Limited).

23rd May, 2000 - became Trading member of F&O (Future & Option) segment of
•
NSE.

16th May, 2001 - became Depository Participant of CDSL (Central Depository

•
Services India Limited).

• 21st March 2003 - became Clearing member of F&O segment of NSE.

30th September 2004 - acquired membership of BSE (The Stock Exchange Mumbai).

Mission

To empower individual investors to take control of their financial lives, free from the

high costs and conflicts of traditional stock broking firms.

Vision

To provide world class investment solutions to the class of investors who believe in 'India

as a story whose time has come and empower them through technology'. To provide the

most useful and ethical Investment Solutions - guided by values driven approach to

40
growth, client service and employee development.

Our Team

Knowledgeable experience professionals having in-depth knowledge.

Dedicated employees committed to customer services.

Our Motto

To treat customers with dignity, respect and care.

Consistent efforts to improve our skill and services to serve the customers better.

41
Services

Equity

K&A Securities Pvt. Ltd. offers the unique feature where our customers get to trade on

NSE, BSE and Derivatives all on one screen. K&A also provides facility to put orders

over the phone through Relationship Managers. Walk-in Customer can always trade

through our branch offices located all across India.

Products offerings for Trading:

 TrustBasic

it is the most comprehensive system for Internet trading. It enables users to get a

browser based trading terminal that can be accessed by a unique ID and password.

This facility is available to all our customers the moment they get registered with

us.

Trade Basic provides:

 Web trading front end

 Online streaming quotes provided on the Browser

 Online fund transfer

 And many more.…

 TrustPower

Application based terminal for active traders with online fund transfer facility. It

provides better speed, greater analytical features like graphs and customized

formula in the market watch.

42
Commodity

K&A Commodities Pvt. Ltd. offers a unique feature of a single screen trading platform

in MCX, NCDEX & NMCEIL. K&A Commodities Pvt. Ltd. offers both Offline &

Online trading platforms. You can Walk in or place your orders through telephone at any

of our branch locations. *Online Commodity Internet trading Platform through:

 TrustBasic

It is the most comprehensive system for Internet trading. It enables users to get a

browser based trading terminal that can be accessed by a unique ID and password.

This facility is available to all our customers the moment they get registered with

us.

Trade Basic provides:

 Web trading front end

 Online streaming quotes provided on the Browser

 Online fund transfer

 And many more.…

 TrustPower

Application based terminal for active traders with online fund transfer facility. It

provides better speed, greater analytical features like graphs and customized

formula in the market watch.

43
Insurance

As we are providing the entire financial product under one roof, we are also giving you

the best product available in insurance Industry. We are also tendering services for Life

Insurance and General Insurance.

An Insurance Distributor is a representative of the insurance buyer. The insurance

Distributor does not represent any particular insurance company, unlike an agent.

We are committed to client to provide best possible services and products according to

clients’ need and as per his portfolio requirement.

Mutual Fund

The K&A Securities Pvt. Ltd. Mutual Fund distribution and advisory division offers

you the opportunity to diversify your investment portfolio. By offering a choice of

investment schemes from all major mutual fund providers we have taken our 100% retail-

focused philosophy a step further.

K&A Securities Pvt. Ltd. Mutual Fund offers options catering to investors with varying

risk-return profiles. We also help investors to choose the best mutual fund, based on their

investment needs.

The K&A Securities Pvt. Ltd. - Advantage

 Wide presence across India

 Schemes of all major fund houses available

 Latest NFO's, MF News & Fund Manager views

44
  Information & tools to help select the right scheme

 Dedicated Relationship Managers

 Regular updation on Mutual Funds portfolio and suggestions if any changes is

required.

Depository

K&A Depository Services offers dematerialization services as a participant in Central

Depository Services Limited (CDSL), through its Depository operations. The company

believes in efficient and cost-effective and integrated service support to its brokerage

business. K&A Securities Private Limited, as a depository participant, will offer

depository accounts for individual investors as well as corporate which will enable them

to transact in the dematerialized segment, without any hassles.

Depository offers a safe, convenient way to hold securities as compared to holding

securities in paper form. Our service provides an integrated single platform for all our

clients ensuring a risk free, efficient and prompt depository process.

Facilities Offered by K&A:

* Online Back office:

You can view your demat account over the Internet and avail a host of services. This

facility empowers our clients to view, download, and print updated holdings with

45
respective valuations.

Link: http://backoffice.kasecurities.com

* De-materialization:

You can submit your physical shares at the K&A branch for dematerialization into

electronic form.

* Re-materialization:

You can also request for Re-materialization which enables you to convert the

dematerialized shares into physical form.

* Transfer:

Inter and intra depository services are available through which you can transfer shares.

* Corporate Actions:

While holding your stock in demat account, in case you are eligible for any bonus and

rights issues the allotment would be transferred to your demat account.

* Easi:

Facility provided by CDSL. You can view your demat account over the Internet and avail

a host of services. This facility empowers our clients to view, download, print updated

46
holdings with respective valuations.

PMS

Successful investing in Capital Markets demands ever more time and expertise.

Investment Management is an art and a science in itself. Professional Investment

Management Services are no longer the privilege of only large institutional investors.

Portfolio Management Services (PMS) is one such service that is fast gaining eminence

as an investment avenue of choice for High Net worth Investors like you. PMS is a

sophisticated investment vehicle that offers a range of specialized investment strategies to

capitalize on opportunities in the market. The Portfolio Management Service combined

with competent fund management, dedicated research and technology, ensures a

rewarding experience for its clients.

K&A Securities Pvt. Ltd. PMS brings with it years of experience, expertise, research and

the backing of India's leading stock broking house. At K&A Securities Pvt. Ltd.,

experienced portfolio management is the difference. You will enjoy a relationship with a

portfolio manager equipped to design and implement a portfolio around your unique

needs. We will advise you on a suitable product based on factors such as your investment

horizon, return expectations and risk tolerance. By entrusting the management of your

Portfolios to K&A Securities Pvt. Ltd., you can enjoy convenience without

compromising on quality.

47
Online Trading

K&A Securities Pvt. Ltd. offers the unique feature where our customers get to trade on

NSE, BSE and Derivatives all on one screen. K&A also provides facility to put orders

over the phone through Relationship Managers. Walk-in Customer can always trade

through our branch offices located all across India.

Products offerings for Trading

K&A Trade Online

it is the most comprehensive system for Internet trading. It enables users to get a browser

based trading terminal that can be accessed by a unique ID and password. This facility is

available to all our customers the moment they get registered with us.

Trade anywhere provides

 Web trading front end

 Online streaming quotes provided on the Browser

 And many more.

48
Welcome to the back office of K & A Securities Private Limited

Users can view the following reports online: Sauda Details Financial Ledger Net position

for the day Net position Detail (for the complete financial year) all these reports are

visible, whenever you logon.

Branch login Client login

# LD Professional # DP Back office

# LD Diet # Trading Back office

# Depository

Career Path

 Fast paced, enriching career with exposure to best business practices

 A chance to be at the forefront of using cutting-edge technologies that redefine

broking business in today’s markets

 Fair compensation & opportunities for growth / promotion based on merit

 Vibrant work culture and opportunities for training, recreation & social

interaction

 Progressive HR policies with an open door approach & proactive processes to

maintain high morale

 Security of employment, subject to minimum acceptable performance

49
What We Offer

 You get an opportunity to realize your dreams consistent with the company’s

goals

 Opportunity to build on your core competencies

 Opportunity to enhance your “entrepreneurial spirit”

 Empowerment to discharge your responsibilities with full “ownership”

 Friendly & informal work culture founded on principles of mutual respect, co-

operation, trust & human values

 And an opportunity to satisfy your economic needs consistent with the prevalent

business environment

Demat Services

K&A Securities Pvt. Ltd. is a participant in Central Depository Services Limited (CDSL),

through its Depository operations. The company believes in efficient and cost-effective

service support to its brokerage business. You will find our service charges very

competitive - offering the best value for your money.

There are Certain Types of Demat Scheme Which Is Offering by K&A Securities Pvt.

Ltd.

Types of accounts:

 On-line account for commodity (MCX, NCDEX, NMCEIL).

 Off-line account for commodity (MCX, NCDEX, NMCEIL).

 On-line account for equity (NSE, NSEF, BSE, BSEF, DSE).

50
 Off-line account for equity (NSE, NSEF, BSE, BSEF, DSE).

On-line account for commodity

 Account Opening Charges Free

 Annual Maintenance Charges on Demat account Free

 Brokerage On Delivery Trades (% ) 0.30

 Brokerage On Intra Day Trades (%) 0.03

 Annual Subscription Cost nil

 Online Brokerage Demo CD

 Online Broking user Guide

 Ledger Balance Update

 Home facility to perform transaction(on-line transaction with the help of internet)

 Live Intra day Technical calls

 Sms facility for stock news (expert suggestions)

 Eight times limit in intraday

 Two times limit in delivery up to seven days

Off-line account for commodity

 Account Opening Charges Free

 Annual Maintenance Charges on Demat account Free

51
 Brokerage On Delivery Trades (% ) 0.30

 Brokerage On Intra Day Trades (%) 0.03

 Annual Subscription Cost nil

 Online Brokerage Demo CD

 Online Broking user Guide

 Ledger Balance Update

 Live Intra day Technical calls

 Sms facility for stock news (expert suggestions)

 Eight times limit in intraday

 Two times limit in delivery up to seven days

On-line account for equity

 Account Opening Charges Rs 500

 Annual Maintenance Charges on Demat account Free

 Brokerage On Delivery Trades (% ) 0.30

 Brokerage On Intra Day Trades (%) 0.03

 Annual Subscription Cost nil

 Online Brokerage Demo CD

 Online Broking user Guide

 Ledger Balance Update

 Home facility to perform transaction(on-line transaction with the help of internet)

52
 Live Intra day Technical calls

 Sms facility for stock news (expert suggestions)

 Eight times limit in intraday

 Two times limit in delivery up to seven days

Off-line account for equity

 Account Opening Charges Rs 300

 Annual Maintenance Charges on Demat account Free

 Brokerage On Delivery Trades (% ) 0.30

 Brokerage On Intra Day Trades (%) 0.03

 Annual Subscription Cost nil

 Online Brokerage Demo CD

 Online Broking user Guide

 Ledger Balance Update

 Live Intra day Technical calls

 Sms facility for stock news (expert suggestions)

 Eight times limit in intraday

 Two times limit in delivery up to seven days

53
 Suggestion of K&A Securities Pvt. Ltd.

 Internet problem which effects on-line account trading.

 Account opening terms should be simple and with in the coverage of client. So

client may not get any difficulties in account opening.

 Connectivity of k & A securities should improve so that client get the full benefit

and may not incurred losses due to loss of connection.

 In, Modinagar, there should be promotional campaign run by the co.

54
 Chapter 7

Current Scenario in Indian Commodity Market

Need of Commodity Derivatives for India:-

India is among top 5 producers of most of the Commodities, in addition to being a

major consumer of bullion and energy products. Agriculture contributes about 22% GDP

of Indian economy. It employees around 57% of the labor force on total of 163 million

hectors of land Agriculture sector is an important factor in achieving a GDP growth of 8-

10%. All this indicates that India can be promoted as a major centre for trading of

commodity derivatives.

Trends in volume contribution on the three National Exchanges:-

Pattern on Multi Commodity Exchange (MCX):-

MCX is currently largest commodity exchange in the country in terms of trade

volumes, further it has even become the third largest in bullion and second largest in

silver future trading in the world.

Coming to trade pattern, though there are about 100 commodities traded on MCX,

only 3 or 4 commodities contribute for more than 80 percent of total trade volume. As per

recent data the largely traded commodities are Gold, Silver, Energy and base Metals.

Incidentally the futures’ trends of these commodities are mainly driven by international

55
futures prices rather than the changes in domestic demand-supply and hence, the price

signals largely reflect international scenario.

Among Agricultural commodities major volume contributors include Gur, Urad,

Mentha Oil etc. Whose market sizes are considerably small making then vulnerable to

manipulations.

Pattern on National Commodity & Derivatives Exchange (NCDEX):-

NCDEX is the second largest commodity exchange in the country after MCX.

However the major volume contributors on NCDEX are agricultural commodities. But,

most of them have common inherent problem of small market size, which is making them

vulnerable to market manipulations and over speculation. About 60 percent trade on

NCDEX comes from guar seed, chana and Urad (narrow commodities as specified by

FMC).

Pattern on National Multi Commodity Exchange (NMCE):-

NMCE is third national level futures exchange that has been largely trading in

Agricultural Commodities. Trade on NMCE had considerable proportion of commodities

with big market size as jute rubber etc. But, in subsequent period, the pattern has changed

and slowly moved towards commodities with small market size or narrow commodities.

Analysis of volume contributions on three major national commodity exchanges

reveled the following pattern,

56
 Major volume contributors: - Majority of trade has been concentrated in few

commodities that are

 Non Agricultural Commodities (bullion, metals and energy)

 Agricultural commodities with small market size (or narrow commodities) like

guar, Urad, Mentha etc.

Trade strategy:-

It appears that speculators or operators choose commodities or contracts where the

market could be influenced and extreme speculations possible.

In view of extreme volatilities, the FMC directs the exchanges to impose

restrictions on positions and raise margins on those commodities. Consequently, the

operators/speculators chose another commodity and start operating in a similar pattern.

When FMC brings restrictions on those commodities, the operators once again move to

the other commodities. Likewise, the speculators are moving from one commodity to

other (from methane to Urad to guar etc) where the market could be influenced either

individually or with a group.

Beneficiaries: - So far the beneficiaries from the current nature of trading are

Exchangers: - making profit from mounting volumes

Arbitragers

Operators

57
 In order to understand the extent of progress the trading the trading in Commodity

Derivatives has made towards its specified objectives (price discovery and price risk

management), the current trends are juxtaposed against the specification

Specified and actual pattern of futures trade:-3

Process Aught to be Actual

Commodities There should be large Largely Traded are

demand for and supply of

the commodity- no  Bullion, Metals and

individual or a group of  Commodities with small

persons acting in concert market size (or narrow

should be in a position to Commodities) like guar,

influence the demand or Burmese Urad, Mentha etc.

supply, and consequently

the price substantially

Towards this, the major

Produced or consumed

Commodities in the

Country such as wheat,

rice, jute etc. and India is the

top first or second

producer of these

Commodities.

3
FMC & TECL research

58
Trade Hedging together with Over speculation and

Strategy Moderate speculation to Manipulation leading to wide

Smoothen the price Fluctuations.

Fluctuations.
Beneficiaries Farmers/producers,, So far exchangers, arbitrageurs,

Consumers and traders Operators etc.,

Either through direct Further there were instances of

Participation or through Wrong price signals accruing losses

Price signals. to farmers in case of menthe, and to

traders in case

Of imported pulses.
Objectives Price Discovery  Pure replication of

International trends not

Taking in account of

Domestic D-S in case of

Non-agril. Commodities

 Wide fluctuations from

Over speculation and

Manipulation in case of

Largely traded agril.

commodities
Risk Management No such evidences and contrarily, the

extreme volatilities in certain

commodities are making futures

59
 More risky for participants.

Thus it is evident that the realization of specified objectives is still a distinct

destination. It is further, evident from the nature of the commodities largely traded on

national exchanges that the factors driving the current pattern of futures trade are purely

speculative.

Reasons for prevailing trade pattern:-

No wide spread participation of all stake holders of commodity markets. The actual

benefits may be realized only when all the stake holders in commodity market including

producers, traders, consumers etc trade actively in all major commodities like rice, wheat,

cotton etc.

Some Suggestions to make futures market as a level playing field for all stake holders:-

 Creation of awareness among farmers and other rural participants to use the

futures trading platform for risk mitigation.

 Contract specifications should have wider coverage, so that a large number

of varieties produced across the country could be included.

 Development of warehousing and facilities to use the warehouse receipt as a

financial instrument to encourage participation farmers.

 Development of physical market through uniform grading and

standardization and more transparent price mechanisms.

 Delivery system of exchanges is not good enough to attract investors. E.g.-

In many commodities NCDEX forces the delivery on people with long

60
 position and when they tend to give back the delivery in next month contract

the exchange simply refuses to accept the delivery on pretext of quality

difference and also auctions the product. The traders have to take a delivery

or book losses at settlement as there are huge differences between two

contracts and also sometimes few contracts are not available for trading for

no reason at all.

 Contract sizes should have an adequate range so that smaller traders can

participate and can avoid control of trading by few big parties.

 Setting of state level or district level commodities trading helpdesk run by

independent organization such as reputed NGO for educating farmers.

 Warehousing and logistics management structure also needs to be created at

state or area level whenever commodity production is above a certain share

of national level.

 Though over 100 commodities are allowed for Derivatives trading, in

practice only a few commodities derivatives are popular for trading. Again

most of the trade takes place only on few exchanges. This problem can

possibly solved by consolidating some exchanges.

 Only about 1% to 5% of total commodity derivatives traded in country are

settled in physical delivery due to insufficiencies in present warehousing

system. As good delivery system is the back bone of any Commodity trade,

warehousing problem has to be handled on a war footing.

61
 At present there are restrictions in movement of certain goods from one

state to another. These needs to be removed so that a truly national market

could develop for commodities and derivatives.

 Regulatory changes are required to bring about uniformity in Octri and sales

tax etc. VAT has been introduced in country in 2005, but, has not yet been

uniformly implemented by all states.

 A difficult problem in Cash settlement of Commodities Derivatives contract

is that, under Forward Contracts Regulation Act 1952 cash settlement of

outstanding contracts at maturity is not allowed. That means outstanding

contracts at maturity should be settled in physical delivery. To avoid this

participants square off their their positions before maturity. So in practice

contracts are settled in Cash but before maturity. There is need to modify the

law to bring it closer to the wide spread practice and save participants from

unnecessary hassle.

Chapter 8

62
 Commodities

Steel: -

General Characteristics: -

Steel is an alloy of iron and carbon, containing less than 2% carbon, 1%

manganese and small amount of silicon, phosphorus, sulphur and oxygen. Steel is most

important engineering and construction material in the world. It is most important, multi

functional and the most adaptable of materials. Steel production is 20 times higher a

compared to production of all non-ferrous metals put together.

Steel compared to other materials of its type has low production costs. The

energy required for extracting iron from ore is about 25% of what is needed for extracting

aluminum.

There are altogether about 2000 grades of steel developed of which 1500

grades are high-grade steels. The large number of grades gives steel the characteristics of

basic production material.

Categories of Steel: -

Steel market is primarily divided in to two main categories- flat and long. A flat

carbon steel product is a plate product or a (hot or cold) rolled strip product. Plate

products vary in dimensions from 10 mm to 200 mm and thin flat rolled products from 1

mm to 10 mm. Plate products are used for ship building, construction, large diameter

welded pipes and boiler applications. Thin flat products find end use applications in

automotive body panels, domestic ‘white goods’ products, ‘tin cans’ and the whole host

63
of other products from office furniture to heart pacemakers. Plates, HR coils and HR

Sheet, CR Sheet and CR coils, GP/GC (galvanized plates and coils) pipes etc. are

included in this category.

A long steel product is a road or a bar. Typical rod product are the reinforcing

rods made from sponge iron for concrete, ingots, billets, engineering products, gears,

tools, etc. Wiredrawn products and seamless pipes are also part of the long products

group. Bars, rods, structures, railway materials, etc are included in this category.

Sponge Iron/ Direct reduced iron (DRI): This is a high quality product

produced by reducing iron ore in a solid state and is primarily used as an iron input in

electric arc furnace (EAF) steel making process. This industry is an integral part of the

steel sector. India is one of the leading countries in terms of sponge iron production.

There are a number of coal-based sponge iron/DRI plants (in the eastern and central

region) and also three natural gas based plants (in western part of the country) in the

country.

Global Scenario: -

The total output of the word crude steel in 2006 stood at 945 million tons,

resulting in a growth of 6.7% over the previous year.

China is the word’s largest crude steel producer in the year 2006 with around

220.12 million tons of steel production, followed by Japan and USA. USA was largest

importer of steel products, both finished and semi finished, in 2005, followed by China

and Germany.

64
 The words largest exporter of semi-finished and finished steel was Japan in 2005,

followed by Russia and Ukraine.

China is the largest consumer now and consumption of steel by China is estimated

to increase by 12-13% in 2007.

Indian Scenario: -

India is the 8 th largest producer of the steel with an annual production of 36.193

million tons, while the consumption is around 30 million tons.

Iron & steel can be freely exported and imported from India. India is a net

exporter of steel.

The Government of India has taken a number of policy measures, such as

removal of iron & steel industry from the list of industries reserved for public sector,

deregulation of price and distribution of iron & steel and lowering import duty on capital

goods and raw materials, since liberalization for the growth and development of Indian

iron & steel industry.

After liberalization India has seen huge scale addition to its steel making capacity.

The country faces shortage of iron and steel materials.

Factors Influencing Demand & Supply of Steel Long and Steel Flat: -

The demand for steel is dependent on the overall health of the economy and the in

fracture development activities being undertaken. The steel prices in the Indian market

primarily depend on the domestic demand and supply conditions, and international

65
prices. Government and different producer and consumer associations regularly monitor

steel prices.

The duty
Percentage Change > 5% 2-5% < 2%
imposed No. of Times on import
Ingots- Mandi 2 10 10
of steel and HRC 2.5 Mumbai 8 3 11 its
HRC 2.0 Imported 12 4 6
fractions HRC fob- Europe 5 9 8 also have

an impact on steel prices. The price trend in steel in Indian markets has been a function of

World’s economic activity. Prices of input materials of iron and steel such as power

tariff, fright rates and coal prices, also contribute to the rise in the input costs for steel

making.

Monthly Variations in Steel Prices from Feb 2005- Dec 2006: -4

Contract specifications of Steel Flat

Symbol STEELFLAT
Description STEELFLATMMMYY
4
MCX certified Commodity Professional Reference Material.

66
Trading Period Mondays through Saturdays
Trading session Monday to Friday:

1st session: 10.00 am to 5.00 pm

2nd session: 5.30 pm to 8.00 pm

Saturday: 10.00 am to 2.00 pm

No. of contracts a year 12
Contact Duration 4 months
Trading
Trading unit 25 MT
Price Quote Rs./ton, Ex-Taloj Kalambo

(excluding execise duty and sales tax).

Maximum order size 200 MT
Tick size (minimum Rs. 10

Price movement)
Daily price limits 4%
Initial margin 5%
Special margin In case of additional volatility, a special margin of

2% or such other percentage, as deemed fit, will be

imposed immediately on, both buy and sale side in

respect of all outstanding position, which will remain

in force of next three days, after which the special

margin will be relaxed.

Maximum Allowable Open For individual clients: 1,00,000 MT

Position For a member collectively for all clients:

25% of open market position.

Delivery
Delivery unit 25 MT with tolerance limit

Between 23.5 MT to 26.5 MT

Delivery Center(s) Warehouses at Taloja/ Kalamboli
Quality Specifications
HR coil conforming to the following specification:

67
 Thickness 2 mm

Width either 1250mm or 910 mm at seller’s option.

It should confirm to IS 11513 Grade D/SAE 1008 (International equivalent)

Delivery is acceptable only in coil form.

Contract specifications of Steel Long

Symbol STEELLONG
Description STEELLONGMMMYY
Trading Period Mondays through Saturdays
Trading session Monday to Friday:

1st session: 10.00 am to 5.00 pm

2nd session: 5.30 pm to 8.00 pm

Saturday: 10.00 am to 2.00 pm

No. of contracts a year 12
Contact Duration 4 months
Trading
Trading unit 15 MT
Price Quote Rs./ton, Ex- Mandi Gobindgarh (including excise

duty but excluding sales tax).

Maximum order size 300 MT
Tick size (minimum Rs. 10

Price movement)
Daily price limits 4%
Initial margin 5%
Special margin In case of additional volatility, a special margin of

68
 2% or such other percentage, as deemed fit, will be

imposed immediately on, both buy and sale side in

respect of all outstanding position, which will remain

in force of next three days, after which the special

margin will be relaxed.

Maximum Allowable Open For individual clients: 1,00,000 MT

Position For a member collectively for all clients:

25% of open market position.

Delivery
Delivery unit 15 MT with tolerance limit

Between 13.5 MT to 16.5 MT

Delivery Center(s) Warehouses at Mandi Gobindgarh
Quality Specifications
Mild steels ingots “3 ½ * 4 ½ inch”

Carbon composition: Below 0.25%

Manganese: Above 0.45%

Material should be physically sound. It should have no hollowness, no piping no

rising. Its surface should be plain.

Quality Specifications: -

Sponge Iron Futures

Sponge Iron Lumps

Chemical Properties (only Magnetic Portion): -

69
  Degree of Metallization: 88 +/- 2%.

 Total Iron: 91%.

 Carbon: 0.2% to 0.3%.

 Sulphur: 0.05% Max.

 Phosphorus: 0.06 Max.

 Sio2 + Al2o3: 6% or Max.

 Char & other process Contaminants: 1% Max.

 Size: 3 to 20 mm

 Undersize arising during tailings (-3mm): 5% Max

Steel Flat: -

HR Coil confirming to the following specification: -

 Thickness 2mm

 Width either 1250 mm or 910 mm at seller’s option.

 It should confirm to IS 11513 Grade D/ SALE 1008 (international equivalent)

 Delivery is acceptable only in coil form.

Steel Long (Bhavnagar): -

 Mild steel ingots 3 ½ * 4 ½ inch.

 Carbon composition: Below 0.25%

 Manganese: Above 0.45%

70
  Material should be physically sound. It should have no hollowness, no piping and

no rising. Its surface should be plain.

Steel Long (Govindgarh): -

 Mild steel ingots 3 ½ * 4 ½ inch.

 Carbon composition: Below 0.25%

 Manganese: Above 0.45%

 Material should be physically sound. It should have no hollowness, no piping and

no rising. Its surface should be plain.

WHEAT

Wheat is cereal grain and consumed worldwide. Wheat is more popular than any

other cereal grain for use in baked goods. Its popularity stems from the gluten that forms

when lour is mixes with water. Wheat is the most widely grown cereal grain in the world.

Global and Indian Scenario: -

The world wheat production in the recent years has been observed to be hovering

between 555 million tons to 625 million tons a year. The biggest cultivators of wheat are

EU 25, China, India, USA, Russia, Australia, Canada, Pakistan, Turkey and Argentina.

EU 25, China, India and US are the four largest producers account for around 60% of

total global production.

World’s wheat consumption is continuously growing with growth in a

population, as it is one of the major staple foods across the world. The major consuming

countries of wheat are EU, China, India, Russia, USA and Pakistan. India has largest area

71
in the world under wheat. However, in terms of production, India is second largest behind

China. In India, Wheat is sown during October to December and harvested during March

to May. The wheat marketing season in India is assumed to begin from April every year.

The major wheat producing states in India are Utter Pradesh, Punjab, Haryana,

Madhya Pradesh, Rajastan and Bihar. Which together account for around 93% of total

production. In terms of productivity, Punjab stands first followed by Haryana, Rajastan,

UP, Gujarat, Bihar and MP. Indian wheat is largely soft/medium hard, medium protein,

bread wheat. India is also produces around 1.5 million tons of durum wheat, mostly in

central and western India, which is not segregated and marketed separately. India

consumes around 72-74 million tons of Wheat every year.

There are around 1000 large flourmills in India, with a milling capacity of

around 15 million tons. The total procurement of wheat by Government agencies during

last 15 years from 8 to 20 million tons, accounting for only 15-20% of the total

production. India exported around 5 m illion tons subsidized by Government in 2004-05,

as a result of surplus stock. Recently Govt. took decision to import wheat in view of,

declining stocks and increasing demand.

Key market moving Factors: -

Price tends to be lower as harvesting progresses and produce starts coming in to the

market. At the time sowing and before harvesting price tend to rise in a view of tight

supply situation. Weather has profound influence on wheat production. Temperature

plays crucial role towards maturity of wheat and productivity.

72
 Change in Minimum Support Price (MSP) by Govt. and the stock available with

Food corporation of India and the release from official stock influence of the price.

Though, international trade is limited, the ups and downs in the production and

consumption at all the major/minor producing and consuming nation dose influence the

long term price trend.

Contract specifications of Wheat

Contract Period Five Months
Trading Period Mondays through Saturdays
Trading session Monday to Friday:

10.00 am to 5.00 pm

Saturday:

10.00 am to 2.00 pm
Trading
Trading unit 10 MT
Quotation based value 1 Quintal
Maximum order size 500 MT
Tick size (minimum 10 Paise

Price movement)
Price Quotation Ex-warehouse Delhi (including all taxes, levies and

sales tax/ VAT, as the case may be)

Daily price limits 4%
Initial margin 5%
Special margin In case of additional volatility, a special margin at

such other percentage, as deemed fit will be imposed

immediately on, both buy and sale side in respect of

all outstanding position, which will remain in force of

next 2 days, after which the special margin will be

relaxed.
Maximum Allowable Open Clientwise- 20000 MT, Member wise-80000 MT or

73
Position 20% of open position, which ever is higher.
Delivery
Delivery unit 10 MT with tolerance limit of 5%

Delivery Margin 25%

Delivery Center(s) Warehouses at Delhi
Quality Specifications
Wheat of Standard Mill variety confirming to the following quality standerds will be

delieverable. The material will be tested using a 3mm sieve.

Defects
(a) Foreign Matter 2.0% (Max)

(organic/inorganic)
(b) Damaged Kernels 2.00 (Max) provided that infestation damaged not to

exceed 1 per 100 kernels.

(c) Shrunken Shriveled 3.00% (Max)

& broken grains

Total defects (a+b+c) Below 6%

Acceptable up to 8% With rebate on 1:1 basis

Rejected total defect is Above 8%

Teat weight up to 76 kg/hl 76kg/hl. Min. acceptable with rebate of 150 grams per

kg/hl or pro-rata variance in hector liter weight deducted

per quintal Below 74 kg/hl

Rejected Below 74 kg/hl

Moisture 11%

Acceptable (Max)13% With rebate 1:1

Reject able Above 13%

74
Quality Specifications: -

Wheat of Standard Mill variety conforming to the following quality standards will be

deliverable; The material will be tested by using 3 mm sieve.

Defects: -

1. Foreign Matter (organic/inorganic) 2.0% (maximum)

2. Damaged Kernel 2.0% (maximum) provided that

infestation damaged not exceed 1

3. Sunken, Shriveled and Per 100 kernels.

Broken grains 3.00% (maximum)

Total Defects (a+b+c) Below 6%

Acceptable Up to 8% with rebate on 1:1 basis

Rejected if total defects Above 8%

Total Weight 76 kg/hl. (minimum)

Up to 74 kg/hl Acceptable with rebate of 150 grams per

kg/hl or pro-rata variance in hector liter

weight deducted per quintal weight

delivered.

Rejected

Below 74 kg/hl
Moisture 11% (maximum)

Acceptable Up to 13% with rebate 1:1

Reject able Above 135

Packing Packing should be in B Twill once used

75
 100kg jute bags, the tare weight

deduction per bag for net weight

calculation shall be 1 kg per quintal of

gross weight.

Quantitative Analysis

1. Investor’s preferences: -

Other
7%

23% Share Market

43%

Bank F.D.

27% Commodity
Market

76
 Investment Prefrences specified in other category

3%
30%
Real Estate
Jwelary
Not Specified
67%

Analysis of data revels that majority of people prefer investment in Real Estate

(28.81% of total sample) which specified in other category investment and it is greater

than share market investment preference.

2. People’s knowledge about Commodity Market: -

13%

Know

Don’t Know

87%

77
 Very few people heard of commodity market. Vast majority of people are unaware

about Commodity Market.

78
3. Investor’s interested to invest in Commodity Market: -

(Out of those, who know Commodity Market)

Interested

50 % 50 % Not Interested

Though some people heard of commodity market due to lack of complete

knowledge about it half of then are not interested in investing in Commodity Market.

4.Commodity Market Investors

Preferences

13%
37% Bullion
20%
Metals
Agricultural
Fossils/Energy
30%

Above data revels that majority of commodity investors like to invest in

Bullion (Gold & Silver).

79
 5. Perception about Commodity Market

25%

Less Risky
Risky
50%
Very Risky

25%

Analysis of data shows that majority of people who are aware about commodity

market; feel that investment in commodity market is very risky. So efforts should be done

to minimize the risk in commodity investment and make peoples about minimum risk in

commodity investment.

6. Opinion about Commodity Market Advertisements

(Expressed by those who know commodity market)

N o t In f o rm a t iv e

100

There is no second opinion amongst commodity investors, that commodity market

advertisements do not give all the necessary information.

80
 COMMODITY MARKET

Questionnaire for Investors

1. Do you have any investment plan?

a. YES b. NO

(if no move to question no. 4)

2. If, yes, where you would like to invest your money?

a. Bank F.D. b. Share Market c. Commodity Market d. Other (specify)

3. Why you prefer specific investment?

---------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------

4. If no, why?

a. Not aware about invest avenues b. Insufficient income c. Other (specify)

5. Do you aware about Commodity Market?

a. YES b. NO

(if no move to question no 12)

81
6. Are you willing to invest in Commodity Market?

(If in Q. 2 Commodity Market, skip this question)

a. If YES, why? ------------------------------------------------------------------------------

b. If NO, why? ------------------------------------------------------------------------------

(If no move to the Question no.10)

7. If yes, which Commodity Exchange you will prefer for investment?

a. MCX b. NCDEX c. NMCE d. Other (specify) f. Can’t Say

8. Why you prefer specific Commodity Exchange for investment?

(if answer to Q.7 f, skip this question)

---------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------

9. In which Commodities you will prefer to Invest? And why?

a. Bullion b. Agricultural c. Metals d. Fossils/Energy

---------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------

10. What is your perception about Commodity Market?

82
 a. Less Risky b. Risky c. Very Risky

11. What you think Commodity Market Advertisements (hoardings, prints etc) are

explanatory enough to give needed useful information?

a. YES b. NO

12. Gender

a. Male b. Female

13. Age Group

a. Below 21 Years b. 21 years – 30 years c.31 years – 40 years

d. 41 years – 50 years e. Above 50 years

14. Occupation

a. Govt. Job b. Private Job c. Business d. Other (specify)

15. Income Group (Per month)

a. Nil b. Below 10,000/- c. 10,000 – 20,000/-

d. 20,000 – 30,000/- e. Above 30,000/-

------------------------------------------------------------------------------------------------------------

------------------------------------------

83
 Qualitative Analysis

1. Investment preferences: -

Most of the investors prefer least risky investment which gives higher returns.

That is why majority (70% of sample) of people interested in investments other than

Share and commodity market.

Very less number of people (only 7%) showed their interest in investment in

commodity market. Main reason for this is lack of awareness and complete

information about commodity market.

2. Commodity Exchanges: -

People who are interested in commodity investment showed more concern

towards NCDEX; for its brand name and people think there might be surety of

transaction at NCDEX.

3. Commodities: -

Bullion is most preferred commodity for investment. Because one can expect

maximum returns from such investment due to rapidly increasing prices of bullion in

market.

4. Advertisements: -

84
 Commodity market Advertisements should be more informative. And it is the

failure of commodity market’s advertisement campaign to attract people’s attention;

as majority of people are not aware about commodity market.

-------------------------------------------------------------------------------------------------------

-----------------------------------------------

85
Questionnaire for Brokers

1. Since how many years you are working as a broker?

---------------------------------------------------------------------------------------------------

2. How does one become broker?

---------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------

3. Which Commodity Exchange you prefer to work?

a. MCX b. NCDEX c. NMCE d. Other (specify)

4. Why do you prefer the specific Commodity Exchange?

---------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------

5. In which commodities do you deal?

86
 --------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------

6. Why do you prefer those commodities?

---------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------

7. If one wants to invest in Commodity Market, how to go about it?

---------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------

10. What is your perception about Commodity Market?

a. Less Risky b. Risky c. Very Risky

87
11. Any suggestion for commodity market?

----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------

12. Gender

a. Male b. Female

13. Age Group

a. Below 21 years

b. 21 years – 30 years

c. 31 years – 40 years

d. 41 years – 50 years

e. Above 50 years

14. Income Group (per year)

a. Below 1,00,000/-

b. 1,00,000 – 1,50,000/-

c. 1,50,000 - 2,50,000/-

d. Above 2,50,000/-

88
-------------------------------------------------------------------------------------------------------

----------------------------------------------

89
BIBLIOGRAPHY

 Trading Commodities and Financial Futures: A Step by Step guide to

Mastering the Market, 3rd Edition by George Kleinman

 Options, Futures and Other Derivatives by Johan C. Hull

 http://commodities.in

 http://finance.indiamart.com/markets/commodity/

 http://www.commoditiescontrol.com

 http://www.mcxindia.com

 http://www.ncdex.com

 MCX Certified Commodity Professional Reference Material

 Business World (15th September 2003)

 Business World (4th December 2006)

90
  http://investmentz.co.in

 http://trade.indiainfoline.com

 http://www.finance.indiamart.com

Speaker 1: - Introduction:- What is commodity? commodity exchange? what is

commodity futures? objective of commodity futures

Speaker 2: - Benifits of commodity futures, Evalution of history of commodity markets

Speaker 3: -India and commodity markets history + legal frame work+ FMC

Speaker 4: -Commodity Exchanges in India & International exchanges

Speaker 5: - Amar: -how commodity market works+ how to invest in commodity

market+ how to become a member

Speaker 6: -Current scenario+suggestions

91