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Commodity Market

The document discusses commodity markets, including what commodities are, commodity markets, objectives and functions of commodity markets, participants in commodity derivative markets, and transactions in commodity markets such as spot contracts, future contracts, and options. It also discusses challenges faced by the Indian commodity market.

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aakriti ritika
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7 views

Commodity Market

The document discusses commodity markets, including what commodities are, commodity markets, objectives and functions of commodity markets, participants in commodity derivative markets, and transactions in commodity markets such as spot contracts, future contracts, and options. It also discusses challenges faced by the Indian commodity market.

Uploaded by

aakriti ritika
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Commodity Market

Financial Market
Commodity

The term commodity refers to any material, which can be bought


and sold.
Commodities in a market's context refer to any movable property
other than actionable claims, money and securities. Commodities
represent the fundamental elements of utility for human beings.
These commodities include gold, silver, copper, zinc, nickel, lead,
aluminum, tin, energy, coffee, pepper, cashew, etc
Commodity
Market

Commodity market refers to markets that trade in primary rather then manufactured
products. It is a physical market place for buying, selling and trading primary products.
Objectives of Commodity
Market

Provide an open platform for the interaction of free play of demand &
supply forces.
It facilitates buying & selling , trading practices & actual working of the
organised market.
To enforce the regulation & abiding by the codes & rules to ensure
confidence of traders & investors.
Functions of Commodity Market
Price discovery
Price risk management
Management of risk
Efficiency in trading
Speculation
Price stabilization function
Improved product quality
Useful to the producer
Participants in Commodity Derivative
Market

Hedgers Arbitrageurs

Speculators Investors
Transactions in
Commodity Market
Spot contracts
Future contracts
Forward contracts
Options
Swap
Trading in Commodity Market
Fully automated screen based trading, an online monitoring and
surveillance mechanism.
Order driven market with complete transparency is supported.
Trade timing: 10:00am to 4:00pm.
Order matches on the basis of commodity, its price, time and quantity.
Order enter : it is an active order.
Tries to find a match.
If it finds a match, trade is generated.
If it does not find a match, order is queued in respective outstanding order
book.
Times stamping is done for each trade.
It trades contracts having one month, two month and three month expiry cycle..
Contracts expire on the 20th of the expiry month.
If 20th of the expiry month is holiday, expiry will be on previous trading day.
New contract will be introduced on the trading day.
Challenges faced by Indian
commodity market

1. Legal challenges
2. Regulatory challenges
3. Infrastructural challenges
4. Awareness among investors and producers

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