Title: AN ANLYSIS OF PAST AND PRESENT STATUS OF COMMODITY DERIVATIVES MARKET IN INDIA
Abstract: In this study an attempted to focus on development and present status of Commodity Derivatives Market in India. The emergence and growth of derivatives market has been witnessed by increased risk in the financial market. The derivatives market hedge the risk of traders, by providing a risk management tool in the market. It is characterized by high volatility in terms of prices and volume of contracts in the market. The commodity derivatives are the first instrument used to secure the farmers by protecting them against the price risk. A large volume of derivatives trading are linked to currency and interest rate derivative as compared to commodity derivative. However, commodity derivative market is very large as compared to underlying physical commodity market. India has a long presence of commodity derivatives trading. Commodity derivatives market has been functioning in India since 19th century. The first organized commodity derivatives market started in 1875 in India. However, by mid 1960s government took a drastic step by banning derivatives trade altogether. The commodity derivatives market remained virtually absent in next decades and it made the restart only in early 2000s. Since its reintroduction it is thriving and the current trend shows strong growth potential of the market, although, the actual growth trajectory will depend upon the attitude of the policy makers and the efficiency of the regulatory mechanism. Commodity derivatives market has occupied imperative position in Indian economy since the establishment of Forward Markets Commission (FMC) in April 2003. There are 6 national and 16 regional commodity exchanges recognized and regulated by this commission (FMC).
Publication Year: 2016
Publication Date: 2016-01-01
Language: en
Type: article
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Cited By Count: 1
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