Commodity futures market

Type :

Theses

Pages :

40 pages

Format :

.doc

Published date :

03/05/2009

Category :

Science & technology

Sub category :

Electronics

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Summary :

Introduction.
What is a 'Commodity'?
How the futures market came about.
The meaning of futures market.
Salient features of a 'Commofity futures contract'.
The main difference between the physical and futures market.
Basics of futures trading.
1. Who uses futures market.
Need for the study.
Trading methodology.
Scope of the study.
Data collection methods.
1. Primary method.
2. Secondary method.
Geojit financial services.
1. Overview.
2. Overseas joint ventures.
3. Milestones.
Basic trading strategies.
1. Buying (going long) if price is expected to increase.
2. Selling (going short) if price is expected to decrease.
3. Spreads.
About MCX & NCDEX.
1. Multi Commodity Exchange (MCX).
2. Vision and mission.
3. Benefits to participants.
4. MCX commodities.
5. National Commodity and Derivatives Exchange (NCDEX).
6. NCDEX commodities.
Commodity futures trading.
1. Evolution of the commodity market in India.
2. The Kabra committee report.
3. Latest developments.
4. Intruments available for trading.
Forward contracts.
1. Limitations of forward markets.
Introduction to futures.
1. Futures terminology.
Introduction to Options.
1. Option terminology.
Basic payoffs.
1. Payoff for futures.
2. Payoff for buyer of futures: Long futures.
Using commodity futures.
Hedging.
Speculators.
Arbitration.
1. Overpriced commodity futures: Buy spot, sell futures.
2. Under priced commodity futures: Buy futures, sell spot
Trading.
1. Futures trading system.
2. Entities in the trading system.
3. Commodity futures trading cycle.
4. Gold futures contract specifications.
5. Margins for trading in futures.
Clearing and settlement.
1. Clearing banks.
2. Depository participants.
3. Settlement.
4. Settlement mechanism.
5. Final settlement.
6. Settlement methods.
7. Closing out by offsetting positions.
Risk management.
Commodity futures trading in Geojit.
Conclusion.

Abstract

India has a long history of commodity futures trading, extending over 125 years. Still, such trading was interrupted suddenly since the mid seventies in the fond hope of ushering in an elusive socialistic pattern of society. As the country embarked on economic liberalization policies and signed the GATT agreement in the early nineties, the government realized the need for futures trading to strengthen the competitiveness of Indian agriculture and the commodity trade and industry. futures trading began to be permitted in several commodities, and the ushering in of the 21-century saw the emergence of new National commodity Exchanges with countrywide reach for trading in almost all primary commodities and their products.

A commodity futures contract is essentially a financial instrument. Following the absence of futures trading in commodities for nearly four decades, the new generation of commodity producers, processors, market functionaries, financial organizations, broking agencies and investors at large are, unfortunately, unaware at present of the economic utility, the operational techniques and the financial advantages of such trading.