Scribd
Upload
154 views14 pages

Commodity Exchange in India

The document provides information on commodity exchanges in India. It discusses reasons for trading on commodity exchanges such as hedging, speculating, arbitrage, and risk shifting. It then lists major commodity exchanges in India including MCX, NCDEX, and NMCEIL. It provides details on the founding, operations, and commodities traded on each of these major exchanges.

Uploaded by

Sandhya Menon
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
154 views14 pages

Commodity Exchange in India

The document provides information on commodity exchanges in India. It discusses reasons for trading on commodity exchanges such as hedging, speculating, arbitrage, and risk shifting. It then lists major commodity exchanges in India including MCX, NCDEX, and NMCEIL. It provides details on the founding, operations, and commodities traded on each of these major exchanges.

Uploaded by

Sandhya Menon
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 14

COMMODITY EXCHANGE IN

INDIA
INTRODUCTION
• A commodity exchange is a place where
various commodities and derivatives are
bought and sold. Commodities exchanges
usually trade on commodity futures.
REASONS FOR TRADIN IN COMMODITY EXCHANGE

• Hedging:  Hedging lessens risk since it involves the purchase or sale of a commodity with
the intention of counterbalancing the profit or loss of another investment. Therefore, any
loss on the previous investment will be hedged, or compensated, by a matching profit from
the hedging instrument.
• Speculating: Speculators are people who are prepared to bear risks in anticipation of
earning profits. Markets are granted liquidity by speculators and it is hard to conceive of
afutures market devoid of speculators.
• Arbitrage: Arbitrage involves buying a commodity at a low price and instantly selling it
for a higher price in another market. Thus, traders can profit from arbitrage opportunities
occurring due to price differences between two exchanges.
• Shifting of Risk: The minute a trader finalizes a deal and secures a price, he is no longer
concerned by unfavorable price shifts. Speculators trade on commodities and derivatives
by undertaking risks in order to maximize profits.
• Information: Exchanges produce huge volumes of data that are intensely scrutinized and
monitored by a wide cross-section of people as the data provides gainful insights about the
prevailing economic conditions.
LIST OF COMMODITY EXCHANGES IN INDIA
• 1. Bhatinda Om & Oil Exchange Ltd., Batinda.
• 2. The Bombay Commodity Exchange Ltd., Mumbai
• 3. The Rajkot Seeds oil & Bullion Merchants` Association Ltd
• 4. The Kanpur Commodity Exchange Ltd., Kanpur
• 5. The Meerut Agro Commodities Exchange Co. Ltd., Meerut
• 6. The Spices and Oilseeds Exchange Ltd.
• 7. Ahmedabad Commodity Exchange Ltd.
• 8. Vijay Beopar Chamber Ltd., Muzaffarnagar
• 9. India Pepper & Spice Trade Association, Kochi
• 10. Rajdhani Oils and Oilseeds Exchange Ltd., Delhi
• 11. National Board of Trade, Indore
• 12. The Chamber Of Commerce, Hapur
• 13. The East India Cotton Association, Mumbai
• 14. The Central India Commercial Exchange Ltd., Gwalior
• 15. The East India Jute & Hessian Exchange Ltd.
• 16. First Commodity Exchange of India Ltd, Kochi
• 17. Bikaner Commodity Exchange Ltd., Bikaner
• 18. The Coffee Futures Exchange India Ltd, Bangalore
• 19. Esugarindia Limited
• 20. National Multi Commodity Exchange of India Limited
• 21. Surendranagar Cotton oil & Oilseeds Association Ltd
• 22. Multi Commodity Exchange of India Ltd
• 23. National Commodity & Derivatives Exchange Ltd
• 24. Haryana Commodities Ltd., Hissar
• 25. e-Commodities Ltd
MAJOR COMMODITY
EXCHANGE
MCX – MULTI COMMODITY EXCHANGE
• MCX: refers to Multi Commodity Exchange which facilitates trading in a variety
of commodities in the country.
• This is an independent commodity exchange operating in India with its base in
Mumbai.
• The MCX was established in the year 2003 with NABARD, NSE, Financial
Technologies India Ltd, Corporation Bank, Bank of India, Bank of Baroda, HDFC
Bank Ltd, SBI Life Insurance Corporation Ltd, Fid Fund (Mauritius) Ltd etc. as key
share holders.
• MCX reaches out to 500 Indian cities with about 10000 trading terminals.
• MCX is the only market in India where multiple commodities are traded.
• MCX is engaged in future trading in a number of commodities like agricultural
commodities, Bullion, Ferrous and Non Ferrous metals, Pulses, Oil and Oil Seeds,
Energy, Plantations, Spices and soft commodities.
• The average daily turnover of MCX is about 1.55 billion US Dollars. Multi
Commodity Exchange (MCX) captures almost 72% of the market share and thus it
occupies No1 position in India in the commodity market.
• MCX occupies no 1 position in the world in respect of silver, No 2 position in
Natural gas and No 3 position in crude oil and gold.
Categorywise Multi Stock Exchange (MCX)
:Commodities Index

• Metals - Aluminum, Copper, Lead, Nickel, Sponge iron, Steel Long


and Steel flat, Tin, Zinc
• Bullion - Gold, silver
• Fibre - Long, medium and short staple cotton, Cotton yarn etc
• Energy - Crude oil, Furnace oil, Natural gas etc
• Spices - Cardamom, Jeera, Pepper, Red Chilly
• Pulses - Chana , Masoor and yellow peas
• Plantation - Arecanut, Cashew kernel, Coffee, Rubber
• Petro chemicals - HDPE, Polypropylene, PVC
• Oil and Oil Seeds - Castor, Coconut, Cotton Seed, Palmoline, ground
nut, Mustard, Soya, Sunflower, Sesame and Rice Bran
• Cereals - Maize
• Others - Mentha oil, Potato, Sugar
• MCX works in joint venture with National Spot Exchange,
a purely agricultural Commodity Exchange for the
standardization in agricultural markets.
• It also works in conjunction with National Bulk Handling
Corporation which helps farmers in bulk handling of
agricultural commodities.
• MCX has also set up a management course i.e ‘Diploma in
Commodities Market’ in cooperation with Welingkar
Institute of Management to train young managers deal
efficiently in the commodities market.
National Commodities and Derivatives Exchange
(NCDEX)
• NCDEX: NCDEX stands for National Commodities and Derivatives Exchange Ltd. The
aim of the company is to make forward contracts simple, safe and secure.
• NCDEX is a public limited company incorporated on 23.4.2003 under the Companies
Act, promoted by national level financial institutions like ICICI Bank, LIC, NABARD,
NSE, Canara Bank, CRISIL, Goldman Sachs, IFFCO and PNB with an aim to bring in
standardization and professionalism in forward contract and also to bring in security to
the producers. They hold equity shares in the NCDEX.
• The NCDEX offers many benefits. The promoters of the company are: financial
institutions with long standing, experience and expertise in the field of financial dealings
and contracts. So they bring in experience, trust, nation wide reach, technology and risk
management skills.
• The NCDEX is a national level, on line commodity exchange and its speciality is that it
is a technology driven exchange market.
• NCDEX is located in Mumbai and has 550 centres all over the country.
• NCDEX trades in 57 commodities like;
– agricultural commodities,
– Precious metals,
– Base metals,
– Ferrous metals,
– Energy,
– polymers etc.
• NCDEX offers a platform for market participants to trade in
commodities and derivatives under sound global practices and on a
wider canvas.
• Another important feature of NCDEX is its transparency.
• NCDEX is regulated by the Forward Markets Commission and is
governed by the Forward Contracts Regulation Act, the Indian
Companies Act, The Stamp Act and the Indian Contract Act.
NMCEIL – NATIONAL MULTI
COMMODITY EXCHANGE OF INDIA
Ltd.
• May'1999, first state-of-the-art demutualised multi-commodity Exchange,
National Multi Commodity Exchange of India Ltd was incoporated.
• (NMCE) was promoted by commodity-relevant public institutions, viz.,
– Central Warehousing Corporation (CWC),
– National Agricultural Cooperative Marketing Federation of India
(NAFED),
– Gujarat Agro-Industries Corporation Limited (GAICL),
– Gujarat State Agricultural Marketing Board (GSAMB),
– National Institute of Agricultural Marketing (NIAM),
– Neptune Overseas Limited (NOL).
• Punjab National Bank (PNB) took equity of the Exchange to establish that
linkage.
• NMCE is the only Exchange in India to have such investment and technical
support from the commodity relevant institutions.
• These institutions are represented on the Board of Directors of the
Exchange and also on various committees set up by the Exchange to
ensure good corporate governance. Some of them have also lent their
personnel to provide technical support to the Exchange management.
• The day-to-day operations of the Exchange are managed by the
experienced and qualified professionals with impeccable integrity and
expertise. None of them have any trading interest.
• NMCE commenced futures trading in 24 commodities on 26th
November, 2002 on a national scale and the basket of commodities
has grown substantially since then to include ;
– cash crops,
– food grains,
– plantations,
– spices,
– oil seeds,
• metals & bullion among others. Research Desk of NMCE is constantly
in the process of identifying the hedging needs of the commodity
economy and the basket of products is likely to grow even further.
• NMCE has also made immense contribution in raising awareness about and catalyzing
implementation of policy reforms in the commodity sector.
• NMCE was the first Exchange to take up the issue of differential treatment of
speculative loss.
• It was also the first Exchange to enroll participation of high net-worth corporate
securities brokers in commodity derivatives market.
• It was the Exchange, which showed a way to introduce warehouse receipt system
within existing legal and regulatory framework.
• It was the first Exchange to complete the contractual groundwork for
dematerialization of the warehouse receipts. Innovation is the way of life at NMCE.

You might also like