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FMFS PPT

The document provides an overview of commodity markets, explaining their functions, benefits, and types of dealings. Key benefits include insurance through hedging, clearing house services, price regulation, uniform standards, dispute settlement, and access to finance. It also highlights major commodity exchanges in India, such as MCX, NCDEX, and ICEX, and outlines different market dealings like spot, forward, future exchange, and speculative contracts.

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5 views

FMFS PPT

The document provides an overview of commodity markets, explaining their functions, benefits, and types of dealings. Key benefits include insurance through hedging, clearing house services, price regulation, uniform standards, dispute settlement, and access to finance. It also highlights major commodity exchanges in India, such as MCX, NCDEX, and ICEX, and outlines different market dealings like spot, forward, future exchange, and speculative contracts.

Uploaded by

fsnjfmc62r
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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COMMODITY

MARKET

Presented by:
Hiten aggatwal(12)
Deepam gupta(47)
MEANING
A Commodity Exchange Is An Organisation Or
Association Of Individuals Which A Place For
Trading In Commodity Or Commodities To Be
Carried On Under Members And For The
Collection And Dissemination Of Market
Information And Which Promotes The Interests
Of Those Dealing In A Particular Commodity."
BENEFITS
1.INSURANCE FUNTION:
Insurance Function performed by commodity exchanges through "Hedging" is, in fact, an
invaluable service rendered. These exchanges heep a lot in either shifting or minimising the
various types of marketing risks. Hedging is the method employed by traders of protecting
themselves against losses due to price fluctuations by executing current buying and future
selling, or vice-versa simultaneously.

2. CLEARING HOUSE:
The Clearing House facility promotes healthy speculation and saves the speculators from
the risks of bringing in all the securities concerned for actual transfer/ delivery. It offfsets
all debits and credits between two parties dealing in certain commodities. The claims
between speculators/ traders are adjusted in a commodity exchange by setting the price
differences only.Thus, involves a common place for settling various transactions entered
into by the traders among
themselves.. The net claims are adjusted daily, weekly or on monthly basis.
3 . Price regulation:
The Price Regulation Function, a produce exchange performs, by virtue of the facility of its
central location enabling it to collect information from all markets and disseminate complete
information regarding price trends prevailing elsewhere, not only imparts harmony in prices for
a particular commodity in a large number of markets, but also smoothens hedging operations.

4.Uniform standards:
A commodity market provides for uniform standards throught inspection , grading and
regulated contracts of buying and selling

5. Dispute settlement
All Disputes arising out of transactions on the exchanges are usually settled through compulsory arbitration
procedures under the established rules and regulations of the exchanges. To maintain the ethical standards,
the members are bound to accept codes (rules) which are established by themselves.

6. Provides finance
, finance is easily made available to the traders who deal with
it. Through the wide market it enjoys and by virtue of the very nature of the transactions
that take place, attract/invites large amount of capital. Besides this, it enjoys a high degree of
liquidity because Security handled could be easily pledged. As commodities dealt in on it are
properly graded articles, bankers will not
hesitate to advance loans.
Commodity exchanges in india
1.Multi Commodity Exchange:
It is also known as MCX and is among the first commodity exchanges opened in India. It is located in
Mumbai and is world's sixth largest commodity futures exchange by volume of trade as it trades 80%
of total value of commodities. Most traded commodities are gold, crude oil, silver, natural gas, nickel,
zinc, copper etc.

2.National Commodities & Derivatives Exchange Ltd:

Also known
3.National as NCDEX.
multi It was exchange:
commodity launched in 2003 by leading financial institutions and State owned banks. It is
second biggest exchange . It accounts for 12% of total vale of commodities futures in the country. Soy oil ,
pulses ,soyabeans
Also known are some
as NMCE, wasof the
themain
firstcommodies
exchangetraded in this
in India exchange.
based at Ahmedabad. It started with
futures in gold and silver. Farm commodities like, soyoil and pulses are top listed
commodities
4.Indian traded
Commodity in these
Exchange exchanges.
(ICEX):
It is based in Gurgaon and was given recognition for futures trading in 2009. Reliance Exchangenext Ltd. is main investor with
IDFC and other maior partners. Gold, crude oil, copper cathode and silver are most traded commodities.
Types of dealings in
CE
1.Spot/cash market
The spot/cash transactions refer to the dealings for immediate delivery and ready payment. A spot deal resembles
ordinary sale.It presuppose the existence of an immediate and effective demand on the one hand and an already
existing or readily available supply,on the other.

2. The forward market:


The forward dealings resemble an ordinary credit transaction where delivery of goods takes place immediately but the payment is postponed.
Sometimes, both the payment and delivery are postponed to a future date. The price, however, is fixed on the date of the transaction. Such types
of transactions are entered into by millers and exporters who want to purchase a specific grade and type of commodity; e.g., - oilseeds, cotton, etc.

3.Future exchange market:


"an agreement to buy or sell, in accordance with law and rules of the exchange, a definite quantity of a commodity at an agreed price at a future
being entered into for the purpose of speculating on or hedging against price changes, and being usually closed out by another off-setting future
trade".

4.speculative contracts
Speculative contract is the act of buying an asset, like a commodity, with the hope of gaining value in the near future
even though it has a high risk of losing value. In commodity trading, speculative income is when a commodity contra
settled without the actual commodity being delivered.

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