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A PROJECT ON DERIVATIVES
SUBMITTED BY PRIYANKA MOHAN PISAT.
ROLL NO 38SUBMITTED TO S.K SOMAIYA COLLEGE OF
SCIENCE, ARTS AND COMMERCE.
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Acknow!"#!$!n%
I take this opportuit! to e"press #! si$ere thaks a% &ratitu%e toMr. Gopa'. I e"press #! &rate(u' thaks to hi# (or the $o##ets,su&&estio a% iputs (or the pro)e$t.
I &rate(u''! a$ko*'e%&e the a$ti+e iterest a% $ooperatio o( #!pro)e$t &ui%e Gopa' sir *hose &ui%a$e has &i+e #e a ispiratio a% he'p*he re-uire% ! #e. I a'so here! e"press #! thaks to a'' the sour$es *ho $otriute%
to the #aki& o( this pro)e$t o / Deri+ati+es0 (or their he'p a% +a'ua'e
&ui%a$e a% pro+i%e% assista$e, *ithout *hi$h this *ou'% ha+e ot ee
possi'e. I a# a'so thak(u' to a'' those *ho supporte% #e i this e%ea+or.
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E&!c'%()! S'$$!*+
The e#er&e$e o( the #arket (or %eri+ati+e pro%u$ts, #ost ota'! (or*ar%s,
(utures a% optios, $a e tra$e% a$k to the *i''i&ess o( riska+erse
e$oo#i$ a&ets to &uar% the#se'+es a&aist u$ertaities arisi& out o(
('u$tuatios i asset pri$es. 2! their +er! ature, the (ia$ia' #arkets are
#arke% ! a +er! hi&h %e&ree o( +o'ati'it!. Throu&h the use o( %eri+ati+e
pro%u$ts, it is possi'e to partia''! or (u''! tras(er pri$e risks ! 'o$ki&i
asset pri$es. As istru#ets o( risk #aa&e#et, these &eera''! %o ot
i('ue$e the ('u$tuatios i the u%er'!i& asset pri$es. 3o*e+er, !
'o$ki&i asset pri$es, %eri+ati+e pro%u$ts #ii#i4e the i#pa$t o(
('u$tuatios i asset pri$es o the pro(itai'it! a% $ash ('o* situatio o(
riska+erse i+estors.
Deri+ati+e pro%u$ts iitia''! e#er&e%, as he%&i& %e+i$es a&aist
('u$tuatios i $o##o%it! pri$es a% $o##o%it!'ike% %eri+ati+es
re#aie% the so'e (or# o( su$h pro%u$ts (or a'#ost three hu%re% !ears. The
(ia$ia' %eri+ati+es $a#e ito spot'i&ht i post1567 perio% %ue to &ro*i&
istai'it! i the (ia$ia' #arkets. 3o*e+er, si$e their e#er&e$e, thesepro%u$ts ha+e e$o#e +er! popu'ar a% ! 1557s, the! a$$oute% (or aout
t*othir%s o( tota' trasa$tios i %eri+ati+e pro%u$ts. I re$et !ears, the
#arket (or (ia$ia' %eri+ati+es has &ro* tre#e%ous'! oth i ter#s o(
+ariet! o( istru#ets a+ai'a'e, their $o#p'e"it! a% a'so turo+er. I the
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$'ass o( e-uit! %eri+ati+es, (utures a% optios o sto$k i%i$es ha+e &aie%
#ore popu'arit! tha o i%i+i%ua' sto$ks, espe$ia''! a#o& istitutioa'
i+estors, *ho are #a)or users o( i%e"'ike% %eri+ati+es.
E+e s#a'' i+estors (i% these use(u' %ue to hi&h $orre'atio o( the popu'ar
i%i$es *ith +arious port(o'ios a% ease o( use. The 'o*er $osts asso$iate%
*ith i%e" %eri+ati+es +is+is %eri+ati+e pro%u$ts ase% o i%i+i%ua'
se$urities is aother reaso (or their &ro*i& use.
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INDEINDE
CHAPTER - In%*o"'c%(on %o D!*()/%()!0CHAPTER - In%*o"'c%(on %o D!*()/%()!0
CHAPTER 1 In%*o"'c%(on %o Co$$o"(%+ M/*k!%0CHAPTER 1 In%*o"'c%(on %o Co$$o"(%+ M/*k!%0
CHAPTER 3 Go2/ Co$$o"(%+ M/*k!%0CHAPTER 3 Go2/ Co$$o"(%+ M/*k!%0
CHAPTER 4 In"(/n Co$$o"(%+ M/*k!%0CHAPTER4 In"(/n Co$$o"(%+ M/*k!%0
CHAPTER 5 Co$$o"(%+ F'%'*!CHAPTER 5 Co$$o"(%+ F'%'*!
CHAPTER 6 R!#'/%o*+ F*/$!wo*kCHAPTER 6 R!#'/%o*+ F*/$!wo*k
CHAPTER 7 T! NCDE P/%9o*$CHAPTER 7 T! NCDE P/%9o*$
CHAPTER 8 Co$$o"(%+ )!*0'0 o%!* /00!% c/00!0CHAPTER 8 Co$$o"(%+ )!*0'0 o%!* /00!% c/00!0
CHAPTER : PRECIOUS $!%/ Go"CHAPTER : PRECIOUS $!%/ Go"
CHAPTER -; C*'"! O(CHAPTER -; C*'"! O(
CHAPTER -- C/0! S%'"+CHAPTER -- C/0! S%'"+
CHAPTER -1 Conc'0(onCHAPTER -1 Conc'0(on
CHAPTER -3 B(2(o#*/
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In%*o"'c%(on %oIn%*o"'c%(on %o D!*()/%()!0D!*()/%()!0
The ori&i o( %eri+ati+es $a e tra$e% a$k to the ee% o( (ar#ers to prote$t
the#se'+es a&aist ('u$tuatios i the pri$e o( their $rop. Fro# the ti#e it
*as so* to the ti#e it *as rea%! (or har+est, (ar#ers *ou'% (a$e pri$e
u$ertait!. Throu&h the use o( si#p'e %eri+ati+e pro%u$ts, it *as possi'e
(or the (ar#er to partia''! or (u''! tras(er pri$e risks ! 'o$ki&i asset
pri$es. These *ere si#p'e $otra$ts %e+e'ope% to #eet the ee%s o( (ar#ers
a% *ere asi$a''! a #eas o( re%u$i& risk.
A (ar#er *ho so*e% his $rop i ;ue (a$e% u$ertait! o+er the
pri$e he *ou'% re$ei+e (or his har+est i Septe#er. I !ears o( s$ar$it!, he
*ou'% proa'! otai attra$ti+e pri$es. 3o*e+er, %uri& ti#es o(
o+ersupp'!, he *ou'% ha+e to %ispose o(( his har+est at a +er! 'o* pri$e.
C'ear'! this #eat that the (ar#er a% his (a#i'! *ere e"pose% to a hi&h risk
o( pri$e u$ertait!.
O the other ha%, a #er$hat *ith a o&oi& re-uire#et o( &rais
too *ou'% (a$e a pri$e risk that o( ha+i& to pa! e"oritat pri$es %uri&
%earth, a'thou&h (a+ora'e pri$es $ou'% e otaie% %uri& perio%s o(o+ersupp'!.
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*ou'% the e&otiate happee% to e (uturest!pe $otra$t, *hi$h *ou'%
ea'e oth parties to e'i#iate the pri$e risk.
I 1?9?, the Chi$a&o 2oar% O( Tra%e, or C2OT, *as esta'ishe% to
ri& (ar#ers a% #er$hats toðer. A &roup o( tra%ers &ot toðer a%
$reate% the @toarri+e $otra$t that per#itte% (ar#ers to 'o$k ito pri$e
up(rot a% %e'i+er the &rai 'ater. These toarri+e $otra$ts pro+e% use(u' as
a %e+i$e (or he%&i& a% spe$u'atio o pri$e $har&es. These *ere
e+etua''! sta%ar%i4e%, a% i 15: the (irst (utures $'eari& house $a#e
ito e"iste$e.
To%a! %eri+ati+es $otra$ts e"ist o +ariet! o( $o##o%ities su$h as
$or, pepper, $otto, *heat, si'+er et$. 2esi%es $o##o%ities, %eri+ati+es
$otra$ts a'so e"ist o a 'ot o( (ia$ia' u%er'!i& 'ike sto$ks, iterest rate,
e"$ha&e rate, et$.
D!*()/%()!0 D!9(n!"D!*()/%()!0 D!9(n!"
A %eri+ati+e is a pro%u$t *hose +a'ue is %eri+e% (ro# the +a'ue o( oe or
#ore u%er'!i& +aria'es or assets i a $otra$tua' #aer. The u%er'!i&
asset $a e e-uit!, (ore", $o##o%it! or a! other asset. I our ear'ier
%is$ussio, *e sa* that *heat (ar#ers #a! *ish to se'' their har+est at a
(uture %ate to e'i#iate the risk o( $ha&e i pri$e ! that %ate. Su$h a
trasa$tio is a e"a#p'e o( a %eri+ati+e. The pri$e o( this %eri+ati+e is
%ri+e ! the spot pri$e o( *heat *hi$h is the /u%er'!i&0 i this $ase.
The For*ar%s Cotra$ts BRe&u'atio A$t, 15:, re&u'ates the
(or*ar%(utures $otra$ts i $o##o%ities a'' o+er I%ia. As per this the
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For*ar% Markets Co##issio BFMC $otiues to ha+e )uris%i$tio o+er
$o##o%it! (utures $otra$ts. 3o*e+er *he %eri+ati+es tra%i& i se$urities
*as itro%u$e% i 771, the ter# /se$urit!0 i the Se$urities Cotra$ts
BRe&u'atio A$t, 15:> BSCRA, *as a#e%e% to i$'u%e %eri+ati+e
$otra$ts i se$urities. Cose-uet'!, re&u'atio o( %eri+ati+es $a#e u%er
the pur+ie* o( Se$urities E"$ha&e 2oar% o( I%ia BSE2I. =e thus ha+e
separate re&u'ator! authorities (or se$urities a% $o##o%it! %eri+ati+e
#arkets.
Deri+ati+es are se$urities u%er the SCRA a% he$e the tra%i& o(
%eri+ati+es is &o+ere% ! the re&u'ator! (ra#e*ork u%er the SCRA. The
Se$urities Cotra$ts BRe&u'atio A$t, 15:> %e(ies /%eri+ati+e0 to i$'u%e
A se$urit! %eri+e% (ro# a %et istru#et, share, 'oa *hether
se$ure% or use$ure%, risk istru#et or $otra$t %i((ere$es or a! other
(or# o( se$urit!.
A $otra$t *hi$h %eri+es its +a'ue (ro# the pri$es, or i%e" o( pri$es,
o( u%er'!i& se$urities.
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P*o"'c%0, P/*%(c(
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A*2(%*/#!*0A*2(%*/#!*0
Aritra&ers *ork at #aki& pro(its ! taki& a%+ata&e o(
%is$repa$! et*ee pri$es o( the sa#e pro%u$t a$ross %i((eret #arkets.
I(, (or e"a#p'e, the! see the (uture pri$e o( a asset &etti& out o( 'ie
*ith the $ash pri$e, the! *ou'% take o((setti& positios i the t*o
#arkets to 'o$k i the pro(it.
=hether the u%er'!i& asset is a $o##o%it! or a (ia$ia' asset, %eri+ati+e#arkets per(or#s a u#er o( e$oo#i$ (u$tios.
ri$es i a or&ai4e% %eri+ati+es #arket re('e$t the per$eptio o(
#arket parti$ipats aout the (uture a% 'ea% the pri$es o( u%er'!i& to
the per$ei+e% (uture 'e+e'. The pri$es o( %eri+ati+es $o+er&e *ith the
pri$es o( the u%er'!i& at the e"piratio o( %eri+ati+e $otra$t. Thus
%eri+ati+es he'p i %is$o+er! o( (uture as *e'' as $urret pri$es.
The %eri+ati+es #arket he'ps to tras(er risks (ro# those *ho ha+e
the# ut #a! ot 'ike the# to those *ho ha+e a appetite (or the#.
Deri+ati+es, %ue to their iheret ature, are 'ike% to the u%er'!i&
$ash #arkets. =ith the itro%u$tio o( %eri+ati+es, the u%er'!i& #arket
*itesses hi&her tra%i& +o'u#es e$ause o( parti$ipatio ! #ore
p'a!ers *ho *ou'% ot other*ise parti$ipate (or 'a$k o( a arra&e#et
to tras(er risk.
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Spe$u'ati+e tra%ers shi(t to a #ore $otro''e% e+iro#et o( the
%eri+ati+es #arket. I the ase$e o( a or&ai4e% %eri+ati+es #arket,
spe$u'ators tra%e i the u%er'!i& $ash #arkets. Mar&ii&, #oitori&
a% sur+ei''a$e o( the a$ti+ities o( +arious parti$ipats e$o#e
e"tre#e'! %i((i$u't i these ki%s o( #i"e% #arkets.
A i#portat i$i%eta' ee(it that ('o*s %eri+ati+es tra%i& is that it
a$ts as a $ata'!st (or e* etrepreeuria' a$ti+it!. Deri+ati+es ha+e a
histor! o( attra$ti& #a! ri&ht, $reati+e, *e''e%u$ate% peop'e *ith a
etrepreeuria' attitu%e. The! o(te eer&i4e others to $reate e*usiesses, e* pro%u$ts a% e* e#p'o!#et opportuities, the ee(it
o( *hi$h are i##ese.
Deri+ati+es #arkets he'p i$rease sa+i&s a% i+est#et i the 'o&
ru. The tras(er o( risk ea'es #arket parti$ipats to e"pa% their
+o'u#e o( a$ti+it!.
D!*()/%()! M/*k!%0D!*()/%()! M/*k!%0
Deri+ati+e #arkets $a roa%'! e $'assi(ie% as $o##o%it! %eri+ati+e
#arket a% (ia$ia' %eri+ati+e #arkets. As the a#e su&&ests, $o##o%it!
#arkets tra%e $otra$ts (or *hi$h the u%er'!i& asset is a $o##o%it!. It $a
e a&ri$u'tura' $o##o%it! 'ike *heat, so!eas, $otto, rapesee%, et$ or
pre$ious #eta's 'ike &o'%, si'+er, et$. (ia$ia' %eri+ati+es #arkets tra%e
$otra$ts that ha+e a (ia$ia' asset or +aria'e as the u%er'!i&. The #ore
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popu'ar (ia$ia' %eri+ati+es are those *hi$h ha+e e-uit!, iterest rates a%
e"$ha&e rates as the u%er'!i&. The #ost $o##o'! use% %eri+ati+es
$otra$ts are (or*ar%s, (utures a% optios.
E$!*#!nc! O9 9(n/nc(/ "!*()/%()!
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Deri+ati+es as a too' (or #aa&i& risks (irst ori&iate% i the
$o##o%ities #arket. The! *ere the (ou% use(u' as the he%&i& too' i the
(ia$ia' #arkets as *e''. I I%ia tra%i& i $o##o%it! (utures has ee i
e"iste$e (ro# the 15th$etur! *ith or&ai4e% tra%i& i $otto throu&h the
esta'ish#ets o( Cotto Tra%e Asso$iatio i 1?6:. O+er a perio% o( ti#e,
other $o##o%ities *ere per#itte% to e tra%e% i (utures e"$ha&es. A
re&u'ator! $ostrait i 15>7s resu'te% i +irtua' %is#at'i& o( the
$o##o%ities (uture #arkets. It is o'! i the 'ast %e$a%e that $o##o%it!
(utures e"$ha&es ha+e ee a$ti+e'! e$oura&e%.
Co$$on+ U0!" D!*()/%()!0Co$$on+ U0!" D!*()/%()!0
3ere *e %e(ie so#e o( the #ore popu'ar'! use% %eri+ati+e $otra$ts. So#e
o( these, a#e'! (utures a% optios *i'' e %is$usse% i #ore %etai's at a
'ater sta&e.
Fo*w/*"0Fo*w/*"0
A (or*ar% $otra$t is a a&ree#et et*ee t*o etities to u! or se'' the
u%er'!i& asset at a (uture %ate, at to%a!s prea&ree% pri$e.
F'%'*!0F'%'*!0
A (utures $otra$t is a a&ree#et et*ee t*o parties to u! or se'' the
u%er'!i& asset at a (uture %ate at to%a!s (uture pri$e. Futures $otra$ts
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%i((er (ro# (or*ar% $otra$ts i the sese that the! are sta%ar%i4e% a%
e"$ha&e tra%e%.
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S*aps are pri+ate a&ree#ets et*ee t*o parties to e"$ha&e $ash
('o*s i the (uture a$$or%i& to a prearra&e% (or#u'a. The! $a e re&ar%e%
as port(o'ios o( (or*ar% $otra$ts. The t*o $o##o'! use% s*aps areH
In%!*!0% */%! 0w/
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In%*o"'c%(on %o Co$$o"(%+ M/*k!%0In%*o"'c%(on %o Co$$o"(%+ M/*k!%0
Rapi% e$oo#i$ &ro*th i re$et !ears *ith #ore tha > per$et GD
&ro*th rate has #a%e I%ia oe o( the (astest &ro*i& e$oo#ies o( the
*or'%. =ith hi&her i$o#e &i+i& si&i(i$at pur$hasi& po*er to o+er a
i''io stro& popu'atio, %e#a% (or a'' ki%s o( &oo%s a% ser+i$es is set to
&ro* rapi%'!.
=ith 'iera'i4atio #easures i p'a$e, $o##o%it! #arkets i I%ia are 'ike'!
to #ake a o+er*he'#i& i#pa$t o the &'oa' $o##o%it! #arkets. I%ia
$orporate etities are o* i a positio to he%&e their pri$e risk i the
%o#esti$ a% iteratioa' $o##o%it! e"$ha&es. O'ie tra%i& at the three
atio*i%e #u'ti$o##o%it! (utures e"$ha&es a''o* %o#esti$ he%&i&,
*hi'e so#e o( the esta'ishe% $o##o%it!spe$i(i$ e"$ha&es are &eari& up
to #eet the ee%s o( the e"pa%i& #arket. There is o %out that the
$o##o%ities #arket i I%ia is %e(iite'! i (or a i& spert o((eri&
eor#ous opportuities o( &ro*th to i+estors, spe$u'ators, aritra&ers a%
e+e i& $orporatios i #au(a$turi& se$tor. Stu%! o( $o##o%it! #arket
a% tra%i& #e$hais# a% opportuities o((ere% ! the# has thus e$o#e
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essetia' (or e+er!oe *ho has so#e iterest i the I%ia e$oo#! i
&eera' a% i $o##o%it! tra%i& i parti$u'ar.
M/*k!%0M/*k!%0
Markets ha+e e"iste% (or $eturies i I%ia a% aroa% (or se''i& a% u!i&
o( &oo% a% ser+i$es. The $o$ept o( #arket starte% *ith a&ri$u'tura'
pro%u$ts a% he$e it is as o'% as the a&ro pro%u$ts or the usiess o(
(ar#i& itse'(. Tra%itioa''!, the (ar#ers use% to ri& their pro%u$e to a
$etra' p'a$e B$a''e% Ma%i2a4ar i a to*+i''a&e *here &rai
#er$hattra%ers *ou'% a'so $o#e a% u! the pro%u$e a% trasport,
%istriute it to other #arkets.
I a tra%itioa' #arket, a&ri$u'ture pro%u$e *ou'% e rou&ht a% kept i the
#arket a% the potetia' u!ers *ou'% $o#e a% see the -ua'it! o( the
pro%u$e a% e&otiate *ith the (ar#ers %ire$t'! (or a pri$e that the! *ou'%
e *i''i& to pa! a% the -uatit! that the! *ou'% 'ike to u!. The %ea's
*ere the stu$k o$e #utua' a&ree#et *as rea$he% o the pri$e a% the
-uatit! to e ou&htso'%.
I the s!ste# o( tra%itioa' #arkets, shorta&es o( a $o##o%it! i a &i+e
seaso *ou'% 'ea% to i$rease i pri$e (or the $o##o%it! or o+ersupp'! o
e+e a si&'e %a! B%ue to hea+! arri+a's $ou'% resu't ito %e$'ie i pri$es
so#eti#es e'o* the $ost o( pro%u$tio to the (arers. Neither the (ar#ers or
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the (oo% &rai #er$hats *ere happ! *ith this situatio si$e the! $ou'% ot
pre%i$t *hat the pri$es *ou'% e o a &i+e %a! or i a &i+e seaso. As a
resu't, a! ti#es the (ar#ers *ere re-uire% to retur (ro# the #arket *ith
their pro%u$e si$e it %i% ot (et$h reasoa'e pri$e a% si$e there *ere o
stora&e (a$i'ities a+ai'a'e ear the #arket p'a$e. It *as i this $ote"t that
(ar#ers a% (oo% &rai #er$hats i Chi$a&o starte% e&otiati& (or (uture
supp'ies o( &rais i e"$ha&e o( $ash at a #utua''! a&reea'e pri$e. This
t!pe o( a&ree#et *as a$$epta'e to oth parties si$e the (ar#er *ou'%
ko* ho* #u$h he *ou'% e pai% (or his pro%u$e, a% the %ea'er *ou'%
ko* his $ost o( pro$ure#et i a%+a$e. This e((e$ti+e'! starte% the s!ste#
o( or&ai4e% $o##o%it! #arket a% (or*ar% $otra$ts, *hi$h suse-uet'!
e+o'+e% the (utures #arket.
Co$$o"(%+Co$$o"(%+
A Co##o%it! is a pro%u$t ha+i& $o##er$ia' +a'ue, *hi$h $a e
pro%u$e%, ou&ht, so'% a% $osu#e%. Co##o%ities are asi$a''! the
pro%u$ts o( pri#ar! se$tor o( a e$oo#!. ri#ar! se$tor o( a e$oo#! is
that part o( the e$oo#!, *hi$h is $o$ere% *ith a&ri$u'ture a% e"tra$tio
o( ra* #ateria's. I or%er to -ua'i(! as a $o##o%it!, a arti$'e or a pro%u$t
has to #eet so#e asi$ $hara$teristi$s, these are 'iste% e'o*H
The pro%u$t has ot &oe throu&h a! $o#p'i$ate% #au(a$turi&
a$ti+it!, thou&h si#p'e pro$essi& B'ike #ii&, $roppi&, et$. is ot
ru'e% out. I other *or%s, the pro%u$t #ust e i a asi$ ra*, upro$esse%
state. BFor ista$e *heat is a $o##o%it! ut *heat ('our a% rea% are
ot $o##o%ities.
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The pro%u$t has to e (air'! sta%ar%i4e% to (a$i'itate *riti& o(
$otra$ts o pro%u$ts o( ui(or# -ua'it!. Be.&. Ri$e is ri$e thou&h
%i((eret +arieties o( ri$e $a e treate% as %i((eret $o##o%ities a%
he$e tra%e% as separate $otra$ts
Ma)or $osi%eratio *hi'e u!i& a parti$u'ar $o##o%it! is its
pri$e Bsi$e there is har%'! a! %i((ere$e i -ua'it! (ro# se''er to se''er.
ri$es o( the pro%u$ts are %eter#ie% ! #arket (or$es, %e#a% a%supp'! a% the! u%er&o rapi% $ha&es('u$tuatios Bpri$e #ust ('u$tuate
eou&h to $reate u$ertait!, *hi$h #eas oth risk a% potetia' pro(it
'oss (or u!ers a% se''ers
ro%u$t shou'% a'so e a+ai'a'e i 'ar&e +o'u#e.
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I to%a!s *or'%, #arkets ee% ot e"ist i ph!si$a' (or# as 'o& as the
e"$ha&e o( &oo%s or ser+i$es takes p'a$e (or a $osi%eratio.
Co##o%it! #arket is there(ore 'o&i$a''! a #arket *here $o##o%ities or
Co##o%it! %eri+ati+es are ou&ht or so'% (or a $osi%eratio. It is a
i#portat $ostituet o( the (ia$ia' s!ste# (or a! $outr!. Thus, it is a
p'at(or# *here a *i%e ra&e o( pro%u$t 'ike pre$ious #eta's B&o'% a%
si'+er, ase #eta's 'ike a'u#iu#, $opper, 4i$, $ru%e oi', eer&! a% other
$o##o%ities 'ike so! oi', pa'# oi', $o((ee, (oo% &rai su$h as ri$e a% *heat,
pu'ses, pepper are tra%e%
E"iste$e o( a +irat, a$ti+e a% 'i-ui% $o##o%it! #arket is or#a''!
$osi%ere% as a hea'th! si& o( %e+e'op#et o( a! e$oo#!. Co##o%it!
#arkets -uite o(te ha+e their $eters i %e+e'ope% $outries.
Co##o%it! (utures i parti$u'ar he'p pri$e %is$o+er! a% assist i+estors i
he%&i& their risk ! taki& positios i $o##o%ities a% e"p'oiti&
aritra&e opportuities i the #arket. The! a'so he'p pro%u$ers to ko*
*hat pri$e their pro%u$ts $ou'% (et$h i (uture. Assure% pri$es a%
traspare$! are thus #a)or ha''#arks o( $o##o%it! #arkets.
T+
2asi$a''!, there are three t!pes o( re&u'ator! $o##o%it! #arketsH
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O)!* %! Co'n%!*>S
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u!ers a% se''ers ut $ou'% ot %ea' *ith the (ia$ia' risk that o$$urre%
*ith u(oresee pri$e $ha&es.
Ma)or $o##o%ities 'iste% a% tra%e% o a &i+e $o##o%it! e"$ha&e *ou'%
or#a''! %epe% o the %e#a% a% supp'! situatio (or that $o##o%it! i
the re&io i *hi$h the e"$ha&e is 'o$ate%. For ista$e, $o##o%it!
e"$ha&e i ;aipur *i'' tra%e ore i &uar a% &uar pro%u$ts *hi'e $o##o%it!
e"$ha&es i I%ore *ou'% e pre%o#iat'! %ea'i& *ith so!eas or so!
as pro%u$ts.
There are #a! re&u'ate% or %ere&u'ate% $o##o%it! e"$ha&es *or'%*i%e.
The! %ea' i #a! $o##o%ities. I I%ia there are : $o##o%it! e"$ha&es
a% three atioa' 'e+e' $o##o%it! e"$ha&es *hi$h %ea' i arou% ?7
$o##o%ities.
B!n!9(%0 o9 %*/"(n# (n Co$$o"(%(!0B!n!9(%0 o9 %*/"(n# (n Co$$o"(%(!0
B!n!9(%0 %o (n)!0%o*
3i&h (ia$ia' 'e+era&e is possi'e i $o##o%it! #arket e.&. tra%i&
i &o'% $a''s (or o'! 8.: iitia' #ar&i. Thus i( the &o'% $otra$t
B1k& is +a'ue% (or >77,777, the i+estor is e"pe$te% to put i #ar&i
o( o'! Rs. 1777 to e a'e to tra%e. I( the pri$e o( &o'% &oes up !
e+e :, i+estor *ou'% #ake pro(it o( Rs 87,777 o a i+est#et
o( Rs 1777 e(ore the e"pir! o( the $otra$t.
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I+estors $a e((e$ti+e'! he%&e the risk i pri$e ('u$tuatios o( a
$o##o%it!. I+estor $a a'so he%&e his risk o i+est#et i sto$k
a% %et #arkets si$e $o##o%ities pro+i%e a sa(er $hoi$e a%
pro+i%e oe #ore a'terati+e a+eue i the i+est#et port(o'io. It
#a! e #etioe% here that the $o##o%ities are 'ess +o'ati'e as
$o#pare% to Gse$s.
Co##o%it! #arkets are e"tre#e'! trasparet i the sese that the
#aipu'atio o( pri$es o( a Co##o%it! is e"tre#e'! %i((i$u't.
2usiess i+o'+es )ust !ou a% #arket. Oe %oes ot ha+e to
#au(a$ture or a$-uire a pro%u$t a''o$ate (ia$ia' resour$es to
a%+ertise #arket a% se'' the pro%u$t, et$.
=ith the rapi% sprea% o( %eri+ati+es tra%i& i Co##o%ities, this
route too has e$o#e a optio (or hi&h et *orth a% sa++! i+estors
to $osi%er i their o+era'' asset a''o$atio.
The (a$t that the sto$k i%i$es a% $o##o%it! i%i$es are ot
$orre'ate% i#p'ies that the $o##o%it! #arkets $a e use% as a
e((e$ti+e %i+ersi(i$atio too', *here i+estors $a park their #oe!.
A 'ook at the per(or#a$e o( the $o##o%ities #arkets %uri& the 'ast
!ear sho*s that the positi+e #o+e#et *as *itesse% %uri& #ost
parts o( the !ears.
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B!n!9(%0 %o '0!*B!n!9(%0 %o con0'$!*>'0!*
It is use(u' (or $osu#er e$ause he &ets a i%ea o( the pri$e at *hi$h
the $o##o%it! *ou'% e a+ai'a'e at a (uture poit o( ti#e.
Corporate etities i parti$u'ar $a e ee(ite% ! he%&i& their risk
i( the! are usi& so#e o( the $o##o%ities as their ra* #ateria'.
Future tra%i& is +er! use(u' to the e"porters as it pro+i%es a a%+a$e
i%i$atio o( the pri$e 'ike'! to pre+ai' a% there! he'p the e"porter
i -uoti& a rea'isti$ pri$e a% there! se$ure e"port $otra$t i a
$o#petiti+e #arket.
B!n!9(%0 %o !cono$+B!n!9(%0 %o !cono$+
As the $ostituets o( the $o##o%it! #arket s!ste# &et ee(ite% I%ia
e$oo#! i tur is a'so e"pe$te% to &ai a 'ot. Gro*th i the $o##o%it!
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#arkets i#p'ies that there $ou'% e tre#e%ous ee(its to the I%ia
e$oo#! i ter#s o( usiess &eeratio a% e#p'o!#et opportuities.
Go2/ Co$$o"(%+ M/*k!%0Go2/ Co$$o"(%+ M/*k!%0
To%a! Co##o%it! #arkets are situate% throu&hout the *or'%. I #a! $ases
the #arket %ea's i spe$ia'i4e% $o##o%ities. There are Co##o%it! #arkets
(or $ru%e oi', #eta's, (oo% &rai, 'i+e sto$k et$. ota'e a#o& the# are,
Chi$a&o 2oar% o( Tra%e i
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t*o o( the o'%est a% 'ar&est %eri+ati+es e"$ha&e i the *or'%. Lo%o
Co##o%it! E"$ha&e Bo* #er&e% *ith Lo%o Futures a% Optios
E"$ha&e is aother 'ea%i& $o##o%it! e"$ha&e i the *or'%. O these
e"$ha&es as *e'' as si#i'ar other %eri+ati+es e"$ha&es, a +er! *i%e ra&e
o( $o##o%ities a% (ia$ia' assets are tra%e%, parti$u'ar'! i the (or# o(
(uture $otra$ts. The $o##o%ities tra%e% i$'u%e pork e''ies, 'i+e $att'e,
su&ar, *oo', 'u#er, $opper, a'u#iiu#, &o'% a% ti.
C(c/#o /n" Co$$o"(%+ T*/"(n#C(c/#o /n" Co$$o"(%+ T*/"(n#
I the 1?97s, Chi$a&o ha% e$o#e a $o##er$ia' $eter si$e it ha% &oo%
rai'roa% a% te'e&raph 'ies $oe$ti& it *ith the EAST. Arou% this sae
ti#e, &oo% a&ri$u'ture te$ho'o&ies *ere %e+e'ope% i the area, *hi$h 'e% to
hi&her *heat pro%u$tio. Mi%*est (ar#ers there(ore use% to $o#e to
Chi$a&o to se'' their *heat to Chi$a&o hopi& to se'' it at a &oo% pri$e. The
$it! ha% +er! 'i#ite% stora&e (a$i'ities a% he$e, the (ar#ers *ere o(te 'e(t
at the #er$! o( the %ea'ers. The situatio $ha&e% (or the etter *he i
1?9? a $etra' p'a$e *as opee% *here (ar#ers a% %ea'ers $ou'% #eet to
%ea' i /spot0 &rai J that is, to e"$ha&e $ash (or i##e%iate %e'i+er! o(
*heat.
Far#ers a% (oo% #er$hat%ea'ers s'o*'! starte% eteri& ito $otra$t (or
(uture e"$ha&es o( &rai (or $ash so that (ar#ers $ou'% a+oi% taki& the
trou'e o( trasporti&stori& *heat, i( the pri$e *as ot a$$epta'e. This
s!ste# *as suita'e to (ar#ers as *e'' as the %ea'ers. The (ar#ers ke* ho*
#u$h he *ou'% e pai% (or his *heat, a% the %ea'er ke* his $ost o(
pro$ure#et *e'' i a%+a$e.
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Su$h $otra$ts e$a#e $o##o a% *ere e+e use% i $o''atera' (or ak
'oas suse-uet'!. The $otra$ts s'o*'! &ot sta%ar%i4e% o -uatit! a%
-ua'it! o( *heat ei& tra%e%. The! a'so e&a to $ha&e ha%s e(ore the
%e'i+er! %ate. I( the %ea'er %e$i%e% he %i%t *at the *heat, he *ou'% se''
the $otra$t so#eoe *ho ee%e% it. O the other si%e i( the (ar#er *ho
%i%t *at to %e'i+er his *heat $ou'% a'so pass o his o'i&atio to aother
(ar#er. The pri$e o( the $otra$t *i'' &o up a% %o* %epe%i& o *hat is
happei& i the *heat #arket. I( the a% *eather ha% $o#e, supp'! o(
*heat *ou'% e 'ess a% the peop'e *ho ha% $otra$te% to se'' *heat *ou'%
ho'% o to #ore +a'ua'e $otra$ts e"pe$ti& to (et$h etter pri$e i( the
har+est *ere i&&er tha e"pe$te%, the se''ers $otra$t *ou'% e$o#e 'ess
+a'ua'e si$e the supp'! o( *heat *ou'% e ap'et!.
S'o*'!, e+e those i%i+i%ua's *ho ha% o itetio o( e+er u!i& or
se''i& *heat e&a tra%i& i these $ota$ts e"pe$ti& to #ake so#e pro(its
ase% o their ko*'e%&e o( the situatio a the #arket o( *heat. The! *ere
$a''e% spe$u'ators. The! hope% to u! $otra$ts at 'o* pri$e a% se'' the# at
hi&h pri$e or se'' the $otra$t i a%+a$e (or hi&h pri$e a% u! the# 'ater at
a 'o* pri$e. This is ho* the (utures #arket i $o##o%ities %e+e'ope% i
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#arkets are ko* as the (utures #arket or are re(erre% to as the e*
$o##o%it! (utures #arket.
A9*(c/A9*(c/
A(ri$as #ost i#portat a% a$ti+e $o##o%it! e"$ha&e is the South
A(ri$a Futures E"$ha&e BSAFE. It *as i(or#a''! 'au$he% i 15?6.
SAFE o'! tra%e% i (ia$ia' (utures (or a 'o& ti#e, ut the $reatio o(
A&ri$u'tura' Markets Di+isio i the e"$ha&e 'e% to the itro%u$tio o( a
ra&e o( a&ri$u'ture (utures $otra$ts (or $o##o%ities. Later tra%i& *as
'iera'i4e% to #er&e, *hite a% !e''o* #ai4e, rea% #i''i& *heat a%
su('o*er see%s.
A0(/A0(/
Chias (irst $o##o%it! e"$ha&e *as esta'ishe% i 1557 a% therea(ter as
#a! as 97 e"$ha&es ha+e appeare% i Chia ! 1558. The #ai
$o##o%ities that *ere tra%e% i these e"$ha&es i$'u%e a&ri$u'tura' stap'es
su$h as *heat $or a% i parti$u'ar so!ea. I 'ate 1559 #ore tha ha'( o(
Chias e"$ha&es *ere $'ose% %o* or re+erte% to ei& *ho'esa'e
#arkets, *hi'e o'! 1: stru$ture% e"$ha&es re$ei+e% &o+er#ets
appro+a' to $otiue to (u$tio as re$o&i4e% e"$ha&es. At the e&ii&
o( 1555 the Chias Se$urities Re&u'ator! Co##ittee e&a a atio *i%e
$oso'i%atio pro$ess *hi$h resu'te% i three $o##o%ities e"$ha&es
e#er&i& i Chia +i4. the Da'ia Co##o%it! E"$ha&e, the he&4hou
Co##o%it! E"$ha&e a% the Sha&hais Future E"$ha&e.
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The Tai*a Future E"$ha&e *as 'au$he% i 155?. Ma'a!sia a%
Si&apore ha+e a$ti+e $o##o%it! (utures e"$ha&es. The Si&apore
e"$ha&e *as (or#e% i 1555 ! the #er&er o( t*o*e'' esta'ishe%
e"$ha&es +i4. the Sto$k E"$ha&e o( Si&apore BSES a% Si&apore
Iteratioa' Moetar! E"$ha&e BSIME.
Co$$o"(%+ F'%'*!0Co$$o"(%+ F'%'*!0
The (irst re$or%e% ista$e o( (utures tra%i& o$$urre% i ri$e i ;apa a%
Chia so#e >777 !ears a&o. I the
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Curre$ies su$h as the S*iss Fra$ a% the ;apaese Ye *ere the ear'iest
$urre$ies to e tra%e% i $urre$! (utures #arket. I the 15?7s (utures
e&a tra%i& o sto$k #arket i%i$es su$h as the S :77.
In"(/n /n" U.S. Co$$o"(%+ $/*k!%In"(/n /n" U.S. Co$$o"(%+ $/*k!%
Co##o%it! #arkets 'ike se$urit! #arket a% other (ia$ia' #arkets are
re&u'ate% ! &o+er#eta' authorities. I I%ia, the #arket re&u'ator (or
$o##o%it! (utures tra%i& is the For*ar% Market Co##issio (u$tioi&
u%er the Miistr! o( Cosu#er A((airs. =hi'e i
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In"(/n Co$$o"(%+ M/*k!%0In"(/n Co$$o"(%+ M/*k!%0
The histor! o( (utures tra%i& i $o##o%ities i I%ia is a'#ost as o'% as that
i the
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There are three t!pes o( re&u'ate% #arket i I%iaH
Spot #arketH Dire$t pur$hase (or i##e%iate $osu#ptio.
Futures a% (or*ar% MarketsH A&ree#ets o* to pa! a%
re$ei+e %e'i+er 'ater.
For*ar% a% (utures re%u$e the risk ! a''o*i& the tra%er to %e$i%e a pri$e
to%a! (or &oo%s to e %e'i+ere% i (uture.
Deri+ati+es #arketH pure'! (ia$ia' trasa$tios ase% o ph!si$a'
tra%i&.
How 0+0%!$ wo*k0How 0+0%!$ wo*k0
The s!ste# i$'u%es (o''o*i& e'e#etsH
3e%&ers, spe$u'ators, i+estors, aritra&ers
ro%u$ers J (ar#ers
Cosu#ers J re(iers, (oo% pro$essi& $o#paies, )e*e'ers, te"ti'e
#i''s, e"porters i#porters.
There are t*o ki%s o( tra%e i $o##o%ities. The (irst is the spot tra%e, i
*hi$h oe pa!s $ash a% $arries a*a! the &oo%s. The se$o% is (utures tra%e.
The u%erpii& (or (utures is the *arehouse re$eipt. A perso %eposits a
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$ertai a#out o(, sa! &oo% i a *arehouse a% &ets a *arehouse re$eipt
*hi$h a''o* hi# to ask (or ph!si$a' %e'i+er! o( the &oo% (ro# the
*arehouse.
2ut so#eoe tra%i& i $o##o%it! (utures ee% ot e$essari'! possess
su$h a re$eipt to strike a %ea'. A perso $a u! or se'' a $o##o%it! (uture
o a e"$ha&e ase% o his e"pe$tatio o( *here the pri$e *i'' &o. Futures
ha+e so#ethi& $a''e% a e"pir! %ate, ! *he the u!er or the se''er either
$'oses his a$$out (or a'' %ea'i& parties i *hi$h the %ai'! pro(it or 'oss %ue
to $ha&es i the (uture pri$e is re$or%e%. S-uari& o(( is %oe ! taki& a
opposite $otra$t so that et outsta%i& is i'.
The i&&est ee(its o( $o##o%it! tra%i& *i'' a$$rue to $o##o%it! tra%ers,
(ar#ers a% $o#paies %ea'i& i $o##o%it! ase% pro%u$ts ! a''o*i&
the# to he%&e their risks. The there are spe$u'ators, *ho are i the &a#e
o'! to #ake #oe! out o( the +o'ati'it! i pri$es. 2ut u'ike i sto$ks, (e*
retai' i+estors are e"pe$te% to tra%e i $o##o%it! (utures si$e it re-uires a
(air it o( e"pertise. E+e those *ho %o *i'' proa'! restri$t the#se'+es to
tra%i& i &o'% a% si'+er.
In"(/?0 0/*! (n Go2/ Co$$o"(%+ M/*k!%0In"(/?0 0/*! (n Go2/ Co$$o"(%+ M/*k!%0
At preset, I%ias share i the &'oa' $o##o%it! #arkets J oth
a&ri$u'tura' a% i%ustria', espe$ia''! o( eer&! pro%u$ts a% ase #eta's J is
ot i& eou&h to #ake a #a)or i#pa$t o iteratioa' pri$es. I%ia
$urret'! a$$outs (or o'! arou% 8 o( the &'oa' oi' %e#a% a% o(
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the &'oa' $opper %e#a%. I $o#pariso, Chia a$$outs (or ? o( the
&'oa' %e#a% (or oi' a% as hi&h as o( the &'oa' %e#a% (or $opper.
3o*e+er, i the &o'% #arket, I%ia a$$outs (ro aout 7 o( the *or'%
%e#a% a% re#ais a ke! area (or ph!si$a' u!i& support o pri$e
$orre$tios.
I $ase o( a&ri$u'tura' $o##o%ities, I%ias pro%u$tio ase is 'ar&e, ut
iteratioa' tra%e +o'u#es are sti'' rather #o%est.
I%ia is the *or'%s 'ar&est pro%u$er o( #i'k, the *or'%s se$o% 'ar&est
pro%u$er o( ri$e a% *heat a(ter Chia a% the *or'%s thir% 'ar&est pro%u$er
o( $otto a(ter Chia a%
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Po%!n%(/ o9 Co$$o"(%+ M/*k!%0 (n In"(/Po%!n%(/ o9 Co$$o"(%+ M/*k!%0 (n In"(/
The (o''o*i& sa'iet (eatures o( the I%ia e$oo#!$o##o%it! #arkets
a% their re'ate% aspe$ts *ou'% e a%e-uate to stress the re'e+a$e o(
$o##o%it! #arket a% the &reat potetia' that the! o((er (or (uture
%e+e'op#et o( I%iaH
I%ia is the *or'%s 'ea%i& pro%u$er o( 16 a&ri$u'tura' $o##o%ities
a% is a'so the *or'%s 'ar&est $osu#er o( e%i'e oi' a% &o'%.
I%ia has 87 #a)or #arkets a% ear'! 6,:77 #a%ies *ith sustatia'
arri+a's o( a +ariet! o( $o##o%ities.
O+er 6777 haats e"ist i $outr! *ith seasoa' arri+a's o( +arious
$o##o%ities.
Near'! : #i''io tra%ers are e&a&e% i $o##o%it! tra%i& i I%ia
Co##o%ities re'ate% Ba% %epe%et i%ustries $ostitute
appro"i#ate'! :? o( I%ias GD, *hi$h Bat (a$tor $ost ase% o pri$es
o( !ear 1555777 (or the !ear 77977: *as Rs 8,58,>61 Crores.
State a% $etra' Go+er#ets ha+e i+este% sustatia' resour$es to
oost pro%u$tio o( a&ri$u'tura' $o##o%ities. Ma! o( these *ou'% e
tra%e% o the (utures #arkets as (oo% pro$essi& i$reases (ro# the
$urret 'e+e' o( to 97:7 $o#para'e to other $outries.
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There are three atioa' 'e+e' Co##o%it! E"$ha&es that tra%e i
appro"i#ate'! 177 $o##o%ities at preset a% the 'ist $otiues to
e"pa%.
I%ia spot #arket (or $o##o%ities su$h as u''io, #eta's,
a&ri$u'ture pro%u$e a% eer&! is esti#ate% at appro"i#ate'! Rs
11,77,777 $rore aua''!. A$$or%i& to the e"perts i the (ie'%, &'oa'
tre%s i%i$ate that the +o'u#es i (utures tra%i& te% to e :6 ti#es the
si4e o( $o##o%ities spot tra%i& i the $outr! Biteratioa''!, the
#u'tip'e (or ph!si$a' +ersus %eri+ati+es is #u$h hi&her at 1: to 7 ti#es.This i#p'ies that the potetia' (or (utures tra%i& #arket i I%ia
$urret'! sta%s at a sta&&eri& Rs ::,77,777 $rores to Rs 66,77,777
$rore aua''!.
Three atio*i%e e'e$troi$ e"$ha&es a% re$o&i4e% re&ioa' or
s#a'' $o##o%it! e"$ha&es i I%ia ha% a esti#ate% that $o#ie%
turo+er o( Rs 1.89 'akh $rore (or the !ear 77:7>. This tras'ates ito
a 868 &ro*th o( the pre+ious (ia$ia' !ear.
Ma! atioa'i4e% a% pri+ate se$tor aks ha+e aou$e% p'as to
%isurse sustatia' a#outs to (ia$e $o##o%it!tra%i& usiess.
Bpri+ate se$tor &iat +i4. 3DFC 2ak a'oe is p'ai& to %isurse o+er
Rs 1,777 Crore (or (ia$i& a&ri$u'ture $o##o%ities i 77:7>
The &o+er#et o( I%ia has iitiate% se+era' #easures to sti#u'ate
a$ti+e tra%i& iterest i $o##o%ities. So#e o( these #easures are
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'i(ti& the a o (utures tra%i& i $o##o%ities
appro+i& e* e"$ha&es
%e+e'opi& e"$ha&es *ith #o%er i(rastru$ture a% s!ste#s su$h as
o'ie tra%i& a%
re#o+i& 'e&a' hur%'es to attra$t #ore parti$ipats
possii'it! o( a''o*i& e"isti& sto$k e"$ha&es to a'so %ea' i
$o##o%ities
As a resu't o( the ao+e %e+e'op#ets, oth the spot a% (utures #arket i
I%ia are *itessi& rapi% &ro*th.
D*()!*0 o9 %! In"(/n co$$o"(%+
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re#ai sta'e. Si#i'ar'! i( the po'i$! a''o*s e"port o( a $o##o%it!
*hi$h (et$hes a etter pri$e i the iteratioa' #arket tha %o#esti$
#arket, #ore pro%u$e *i'' e e"porte%. The pri$e i the %o#esti$ #arket
*i'' rise %ue to short supp'! a% *i'' te% to #at$h the iteratioa'
'e+e's.
Sow(n# /n" H/*)!0%(n#
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ur%e *i'' re('e$t i the pri$e o( the $o##o%it!. Thus a hi&her iterest
$ost e$o#es a $otriutor to a hi&her $o##o%it! pri$e.
C'**!nc(!0C'**!nc(!0
I the $ase o( $o##o%ities that are i#porte%, i( the %o#esti$ $urre$!
has %epre$iate% a&aist the
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are pres$rie% ! the e"$ha&e a% this *i'' (or# part o( the (utures
$otra$t.
There is usua''! a ti#e %i((ere$e et*ee the e"pir! o( (utures $otra$t a%
the %e'i+er! perio%. As a resu't o( this iter+ei& perio%, the $ash pri$e (or a
$o##o%it! *ou'% e %i((eret (ro# its (utures pri$e #etioe% i the
$otra$t.
B'+!*?0 O2(#/%(onB'+!*?0 O2(#/%(on
The u!ers o( (utures $otra$t ha+e t*o o'i&atios. Oe, he has to
take %e'i+er! o( the $o##o%it! pur$hase% i( the $otra$t is a''o*e% to ru its
(u'' 'i(e ter#. Se$o%, he has to pa! the pur$hase pri$e. The u!er a'so has a
ri&ht to the (a$i'it! o( o((setti& his e"isti& o'i&atio throu&h a opposite
tra%e. This ui-ue (eature i the (utures $otra$t &i+es the u!er ('e"ii'it!
*ith re&ar%s to %e'i+er! o e"pir!.
S!!*?0 o2(#/%(onS!!*?0 o2(#/%(on
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The se''ers o'i&atio is to %e'i+er the $o##o%it! as per sta%ar%i4e%
-uatit! a% -ua'it! a% re$ei+e the pri$e. 3e too has the (a$i'it! o(
o((setti& the e"isti& $otra$t.
Co0(n# o'%
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to %eposit (u%s i the (or# o( #ar&i i #ar&i a$$out. Let us sa!, it is Rs
777 per $otra$t o( 17 &. si$e the i+estor has ou&ht three No+e#er
Go'% (utures, the #ar&i a#out *i'' e Rs >777 B8 " 777. The i+estor
#ust %eposit this su# i the #ar&i a$$out *ith the #e#er. This #ar&i
is ko* as iitia' #ar&i.
M/*k(n# %o $/*k!%M/*k(n# %o $/*k!%
At the e% o( e+er! tra%i& %a!, the #ar&i a$$out is a%)uste% to
re('e$t the i+estor &ai or 'oss. Supposi&, o the se$o% %a! o( the$otra$t, the No+e#er (utures pri$e (or &o'% $'oses at 5177 per 17 . This
*i'' resu't ito a &ai o( Rs 877 B8 " 177 o the three $otra$ts ou&ht !
the i+estor a% +i$e +ersa i( 'oss. The resu'tat &ai or 'oss *i'' o %a! to
%a! asis *i'' e take to #ar&i a$$out. =hi'e the &ai is $re%ite% to the
#ar&i a$$out a% *i'' ha+e a i#pa$t o( i$reasi& the a'a$e i #ar&i
a$$out, a 'oss sustaie% *i'' e %eite% to the #ar&i a$$out. This %ai'!
+a'uatio o( the a$$out is ko* as #arki& the #arket.
M/*#(n c/M/*#(n c/
You are o* a*are that the %ai'! +a'uatio o( the tra%ers (uture
positio resu'ts ito a 'oss or &ai %epe%i& upo pri$e #o+e#ets. =he
su$h +a'uatio resu'ts ito a 'oss the e"$ha&e *i'' #ake a #ar&i $a'' o
the tra%er. The e((e$t o( su$h #ar&i $a'' is that the tra%er shou'% ri& i
that #u$h o( (resh (u%s to e %eposite% i that #ar&i a$$out. Thus
#ar&i $a''s are #a%e ! the e"$ha&es o'! *he the (utures ppositio o(
a tra%er resu'ts ito a 'oss as $o#pare% to its +a'ue o the pre+ious %a!.
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M/(n%!n/nc! $/*#(nM/(n%!n/nc! $/*#(n
Maitea$e #ar&i is that portio o( the iitia' #ar&i *hi$h shou'%
e the #ii#u# pres$rie% #ar&i, *hi$h shou'% a'*a!s e a+ai'a'e i the
#ar&i a$$out. I #a! e"$ha&es, the #aitea$e #ar&i is usua''!aout 6: o( iitia' #ar&i. The #ai purpose o( #aitea$e #ar&i is to
esure that the #ar&i a$$out e+er e$o#es e&ati+e.
C!/*(n# $/*#(nC!/*(n# $/*#(n
E+er! tra%er is re-uire% to #aitai #ar&i a$$out *ith the
roker#e#ers. I the sa#e *a! e+er! roker o( the e"$ha&e is re-uire%
to p'a$e $ertai #oe! *ith the $'eari& house. Thus the #ar&i a#out
pro+i%e% ! the roker *ith the $'eari& house is ko* as $'eari& #ar&i.
O2@!c%()!0 o9 Co$$o"(%+ F'%'*!0 Con%*/c%O2@!c%()!0 o9 Co$$o"(%+ F'%'*!0 Con%*/c%
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he%&i& *ith a +ie* to tras(er the pri$e risk
pri$e %is$o+er! throu&h a 'ar&e u#er o( trasa$tio a% p'a!ers
#aitea$e o( u((er sto$k a% etter a''o$atio o( resour$es
re%u$tio i i+etor! re-uire#et a% there! re%u$tio i $ost o(
$arr!
pri$e stai'i4atio throu&h a'a$e% %e#a% a% supp'! positio
3e'p raise ak (ia$e throu&h traspare$! a% ('e"ii'it! $o#i&
*ith (utures $otra$t.
P*(c(n# Co$$o"(%+ F'%'*!0P*(c(n# Co$$o"(%+ F'%'*!0
The re'atioship et*ee $ash pri$e a% (uture pri$e $a e e"p'aie% i
ter#s o( $ost o( $arr!. Cost o( $arr! is a i#portat e'e#et i %eter#ii&pri$i& re'atioship et*ee spot a% (utures pri$es as *e'' as et*ee
pri$es o( (utures $otra$t o( %i((eret e"pir! #oths. A$$or%i& to the $ost
o( $arr! #o%e', (utures pri$es %epe% o the spot pri$e o( the $o##o%it!
a% the $ost o( stori& the $o##o%it! (ro# the %ate o( spot pri$e to the %ate
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o( %e'i+er! o( the (utures $otra$t. Cost o( stora&e a% isura$e a% $ost o(
(ia$i& $ostitute $ost o( $arr!. Esti#ate% $ost o( (utures pri$e is a'so
$a''e% @(u'' $arr! (utures pri$e.
Co0% o9 C/**+ Mo"!
F P S Q C
=here
F P Future pri$e
S P Spot pri$e
C P Cost o( $arr!
For e"a#p'eH i( the $ost 177 o( &o'% i the spot #arket is Rs. >7,777
the $ost o( $arr! is 1 p.a., the (air +a'ue o( a 9 #oth (utures $otra$t *i''
e
F P S Q C
F P >7,777 Q 977
F P Rs >977
The (air +a'ue o( a (utures $otra$t is the theoreti$a' +a'ue o( *here a (utures
$otra$t shou'% e positioe%, &i+e the $urret spot pri$e, $ost o( (ia$i&
a% the tie (or e"piratio.
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Fair +a'ue o( a (utures $otra$t $a e $a'$u'ate% usi& the (o''o*i&
e-uatioH
F P S B1 Q r
=here
F P Future pri$e
S P Spot pri$e
R P $ost o( (ia$i& Baua''! $o#pou%e%
P ti#e ti'' e"piratio o( the $otra$t
i( the +a'ue o( @r is $o#pou%e% # ti#es i a !ear, the (or#u'a to $a'$u'ate
the (air +a'ue *i'' e
F P S B1 Q r#
=here # P o. o( ti#es $o#pou%e% i a !ear
For e"a#p'e
The $ost o( 177 o( &o'% i the spot #arket is Rs. >7777 a% the $ost o(
(ia$i& is 1 p.a. $o#pou%e% #oth'!, the (air +a'ue o( a 9 #oth
(utures $otra$t *i'' e
F P SB1 Q r#
F P >7,777 B1 Q 7.11
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F P >7,777 " 1.797>
F P >,98>
The (air +a'ue o( a (utures pri$e *ith $otiuous%ai'! $o#pou%i& $a e
e"presse% as
F P Se
=here
F P Future pri$e
S P Spot pri$e
R P COST OF FINANCING
N P ti#e ti'' e"piratio o( $otra$ts i !ears a%
E P .61??
The ao+e (or#u'a is use% to $a'$u'ate the (utures pri$e o( a $o##o%it!
*he o stora&e $osts are i+o'+e%
The (utures pri$e is e-ua' to the su# o( #oe! @S i+este% at a rate o(
iterest @r (or a perio% o( @ !ears.
For e"a#p'eH i( the $ost o( 177 o( &o'% i the spot #arket is Rs >7,777
the $ost o( (ia$i& is 1 p.a. the (air +a'ue o( 9 #oth (utures $otra$t
*i'' e
F P se
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F P >7777 " e
F P >7777 " 1.7976
F P Rs. >,99
R!#'/%o*+ F*/$!wo*kR!#'/%o*+ F*/$!wo*k
The &o+er#et at %i((eret ti#es appoite% (our %i((eret $o#ities to stu%!
this se$torH
The Shro(( Co##ittee i 15:7H this $o##ittee i (a$t *as aske% to &o
ito %etai's o( the %ra(t o( Futures Markets BRe&u'atio 2i'' a% re+ise it
*here+er e$essar!. The $o##ittee *as (or#e% e+e e(ore the For*ar%
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Cotra$ts Bre&u'atio A$t, 15: $a#e ito (or$e. The (i%i&s o( the
Co##ittee are there(ore o #ore re'e+at.
The Dat*a'a Co##ittee i 15>>H This $o##ittee re#e#ers o(
reitro%u$tio o( (utures tra%i& i #a)or $o##o%ities.
The Khusro Co##ittee i 15?7H Apart (ro# the Dat*a'a Co##ittee,
this Co##ittee a'so re$o##e%e% the reitro%u$tio o( (utures tra%i& i
#a)or $o##o%ities. The &o+er#et (ia''! rou&ht a$k (or*ar%
tra%i& i a&ri$u'tura' $o##o%ities that %i% ot ha+e a +er! si&i(i$atro'e i the e$oo#!$astor see% a% $astor oi', )a&&er!, )ute, pepper,
potato a% tur#eri$. Se+era' 'o$a'i4e% e"$ha&es starte% tra%i& i the
sa#e $o##o%it!, ea$h o( the# *ith a 'o$a' roker*ho'esa'e
#er$ha%iser $ostitue$!. 2ut, e+e a(ter a %e$a%e, oe o( the #arket
a$hie+e% the 'e+e's o( 'i-ui%it! that e"iste% prior to the a o
$o##o%it! (uture tra%i&.
The Kara Co##ittee i 1558, this $o##ittee #a%e si&i(i$at
$otriutio to the $ause o( $o##o%it! tra%i& i the $outr! a% is i a
*a! resposi'e (or to%a!s #o%er s!ste# o( $o##o%it! tra%i& *ith
three atioa' 'e+e' a% other $o##o%it! e"$ha&esasso$iatio i
operatio. This $o##ittee (i%i&s a% re$o##e%atios ha+e there(ore
ee &i+e #ore $o+era&e ot o'! i this ook ut a'so i traii&
sessios a% a$a%e#i$ $ir$'es i &eera'.
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O$e (utures tra%i& e$a#e operatioa', ispite o( 'iera'i4atio, it has ee
%i((i$u't (or tra%e to e tras(erre% (ro# i''e&a' 'a$k #arket, *hi$h has 4ero
ta" 'iai'it! o reporti& re-uire#ets to the 'e&a' authorities as $o#pare%
to the re&u'ate% #arkets, *here ta"es reporti& are part o( the 'e&a'
pro$e%ures. It *as i respose to this ee% (or $o##o%it! (utures i I%ia
that the (ourth $o##ittee ! the a#e o( Kara Co##ittee *as set up i
;ue 1558, (or assessi& the s$ope (or (or*ar%s a% (utures %e+e'op#et o(
(utures tra%i& i I%ia. The $o##ittee so istitute% *as ko* as the
Kara Co##ittee i the a#e o( its $hair#a r. Ka#a' Na!a Kara, *ho
*as a pro(essor o( E$oo#i$s i the I%ia Istitute o( u'i$
A%#iistratio, De'hi.
Ma! o( the re$o##e%atio o( the Kara Co##ittee ha+e ee
i#p'e#ete%. This &a+e a i#petus to the a$ti+ities o( the $o##o%it!
#arket i the $outr!. =ith the $urret iitiati+es o( the re&u'ators, these
#arkets ha+e sho* (urther re+o'utioar! $ha&es i the 'ast (e* !ears, *ith
the atioa''e+e' #u'ti $o##o%it! e"$ha&es i I%ia sho*i& tre#e%ous
potetia' to tap the $o##o%it! %eri+ati+es #arket.
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The i$reasi& +o'u#e o these e"$ha&es su&&ests that $o##o%it! #arkets
i I%ia see# to e a pro#isi& &a#e.
Natioa' 2oar% o( Tra%e
Mu'ti Co##o%it! E"$ha&e o( I%ia
Natioa' Co##o%it! a% Deri+ati+es E"$ha&e o( I%ia Lt%
R!#(0%!*!" co$$o"(%+ !&c/n#!0 (n In"(/
E&c/n#!0 P*o"'c% %*/"!"
2hati%a O# Oi' E"$ha&e Lt%. Gur
The 2o#a! Co##o%it! E"$ha&e
Lt%.
Su('o*er Oi', Cotto Bsee% oi',
Sa(('o*er Bsee%, oi' a% oi' $ake,
Grou%ut, Castor oi', Castor See%,
Sesa#u# BOi' a% Oi' Cake, Ri$e
2ra, Ri$e 2ra Oi' Oi' Cake,
Cru%e a'# Oi'
The Kapur Co##o%it! E"$ha&e
Lt%.
Rape See%Mustar% See% Oi' Cake
Ah#e%aa% Co##o%ities E"$ha&e
Lt%.
Cotto See%, Castor See%.
I%ia epper a% Spi$e Tra%e
Asso$iatio, Ko$hi
epper
Ra)%hai Oi's Oi' See%s E"$ha&eLt%, De'hi
Gur, Rapesee%Mustar%
The East I%ia Cotto Asso$iatio,
Mu#ai
Cotto
The Cetra' I%ia Co##er$ia'
E"$ha&e Lt%, G*a'iar
Gur
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The East Ii%a ;ute 3essia
E"$ha&e Lt%, Ko'kata
3essia, Sa$ki&
First Co##o%it! E"$ha&e o( I%ia
Lt%, Ko$hi
Copra, Co$uut oi' Copra Cake
Natioa' Mu'ti Co##o%it!
E"$ha&e o( I%ia Lt%, Ah#e%aa%
Gur, R2D, a#o'ie Cru%e a'#
Oi', Copra, Rapesee%Mustar% See%,
So!ea, Cotto, Sa(('o*er,
Grou%ut BSee%, Oi', Oi' Cake,
Su&ar, Gra#, Co$out Boi' A% Oi'
Cake, Castor Oi', Sesa#u#,
Lisee%, Ri$e 2ra oi', epper,
Guarsee%, A'u#iiu# I&ots, Ni$ke',
aaspati, Ruer, Copper, i$,
Lea%
The Co((ee Futures E"$ha&e I%ia
Lt%, 2a&a'ore
Co((ee
Natioa' Co##o%it! a% Deri+ati+es
E"$ha&e Lt%
So!ea, re(ie so! oi', Mustar%
See%, Mustar% Oi', Me%iu# Stap'e
Cotto, Lo& Stap'e Cotto,
a'#o'ie Cru%e a'# Oi', Go'%,
Si'+er a% #a! #ore
Mu'ti Co##o%it! E"$ha&e Castor Oi', Castor See%s, Cotto
See%s, Cru%e a'# Oi', Grou%ut
Oi', Cotto Lo& Stap'e, Cotto
Me%iu# Stap'e, Cotto Short Stap'e,
Kapas, A'u#iiu#, Copper, Ni$ke',
Spo&e Iro, Stee' F'at, Stee' Lo&,
Ti a% #a! #ore.
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T! NCDE P/%9o*$T! NCDE P/%9o*$
P*o9(!P*o9(!
Natioa' Co##o%it! Deri+ati+es E"$ha&e Li#ite% BNCDE is a
pro(essioa''! #aa&e% o'ie #u'ti $o##o%it! e"$ha&e pro#ote% !
atioa' 'e+e' istitutios. This ui-ue pareta&e ea'es it to o((er a
ou-uet o( ee(its, *hi$h are $urret'! i short supp'! i the $o##o%it!#arkets. NCDE is a pu'i$ 'i#ite% $o#pa! i$orporate% o Apri' 8,
778 u%er the Co#paies A$t, 15:>. It otaie% its Certi(i$ate (or
Co##e$e#et o( 2usiess o Ma! 5, 778. It has $o##e$e% its
operatios o De$e#er 1:, 778.
NCDE is the !ou&est o( the three atioa' 'e+e' #u'ti $o##o%it!
e"$ha&es appro+e% ! the &o+er#et ti'' %ate.
NCDE is a atio'e+e', te$ho'o&! %ri+e %e#utua'i4e% o'ie
$o##o%it! e"$ha&e *ith a i%epe%et 2oar% o( Dire$tors a%
pro(essioa's ot ha+i& a! +este% iterest i $o##o%it! #arkets.
NCDE is re&u'ate% ! For*ar% Market Co##issio i respe$t o( (utures
tra%i& i $o##o%ities. NCDE is 'o$ate% i Mu#ai.
NCDE $urret'! (a$i'itates tra%i& o( :> $o##o%ities Cashe*, Castor
See%, Chaa, Chi''i LCA889, Co((ee Arai$a, Co((ee Rousta, Cotto
See% Oi'$ake, Cru%e a'# Oi', Grou%ut Bi she'', Grou%ut E"pe''er
Oi', Guar &u#, Guar See%s, Gur, ;eera, ;ute sa$ki& a&s, I%ia ? ##
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Cotto , I%ia 81 ## Cotto , Le#o Tur, Masoor Grai 2o'%, Me%iu#
Stap'e Cotto, Metha Oi' , Mu'err! Gree Co$oos ,Rapesee% Mustar%
See% ,epper ,otato ,Ra* ;ute, I%ia aroi'e% Ri$e BIR8>IR>9,I%ia
Ra* Ri$eBar#a'R17>,I%ia usa 2us#ati Ri$e, I%ia Tra%itioa'
2as#ati Ri$e,R2D a'#o'ei, RMSee% Oi' Cake, Re(ie% So! Oi' ,
Ruer,Sesa#e See%s, So! 2ea, Spo&e Iro, E"pe''er Mustar%
Oi' ,Mu'err! Ra* Si'k,656 Kapas, Su&ar, Tur#eri$,
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M!%/0
E!c%*o+%(c Co
M(" S%!! In#o%0
S
L!$on T'* In"(/n P/*2o(!" R(c!
In"(/n P'0/ B/0$/%( R(c! In"(/n T*/"(%(on/ B/0$/%( R(c!
In"(/n R/w R(c! In"(/n 18 $$ Co%%on
In"(/n 3- $$ Co%%on M/0oo* G*/(n Bo"
M!"('$ S%/
R/
T'*$!*(c U*/"
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S()!*
NCDE En!*#+
B*!n% C*'"! O(
F'*n/c! O(
P*o$o%!*0P*o$o%!*0
The E"$ha&e is pro#ote% ! *e'' ko* atioa' 'e+e' istitutios +i4.
ICICI 2ak Li#ite%, Natioa' Sto$k E"$ha&e o( I%ia Li#ite% BNSE,
Natioa' 2ak (or A&ri$u'ture a% Rura' De+e'op#et BNA2ARD a% Li(e
Isura$e Corporatio o( I%ia BLIC. Four other atioa' 'e+e' istitutios J
Caara 2ak, CRISIL Li#ite% BCRISIL, u)a Natioa' 2ak BN2 a%
I%ia Far#ers Ferti'iser Cooperati+e Li#ite% BIFFCO ha+e suse-uet'!
take e-uit! stake i the E"$ha&e. A'' these shareho'%ers ri& a'o& *ith
the# e"pertise i $'ose'! re'ate% (ie'%s su$h as risk #aa&e#et BCRISIL,
rura' ak et*ork BCaara 2ak i the south a% N2 i the orth,
te$ho'o&! BICICI 2ak, o'ie tra%i& te$ho'o&! a% %eri+ati+e tra%i&
BNSE, a&ri$u'ture BNA2ARD, #arket rea$h BIFFCO *hi$h has the 'ar&est
u#er o( (ar# $ooperati+es a% e"pertise i istitutio ui'%i& BLIC.
2esi%es these shareho'%ers, there are $urret'! re-uests (ro# other aks (or
taki& up e-uit! stake i NCDE.
These pro#oters o( NCDE are pro#iet p'a!ers i their respe$ti+e (ie'%s
a% ri& *ith the# istitutio ui'%i& e"perie$e, trust, atio *i%e rea$h,
te$ho'o&! a% risk #aa&e#et ski''s.
S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE :>:>
http://www.ncdex.com/products/products_precious_megasilver.aspx?Type=Genhttp://www.ncdex.com/products/products_ener_brent.aspx?Type=Genhttp://www.ncdex.com/products/products_ener_furnaceoil.aspx?Type=Genhttp://www.ncdex.com/products/products_precious_megasilver.aspx?Type=Genhttp://www.ncdex.com/products/products_ener_brent.aspx?Type=Genhttp://www.ncdex.com/products/products_ener_furnaceoil.aspx?Type=Gen -
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CANARA 2ANK CRISIL GOLDMAN SAC3S
ICICI 2ak IFFCO LIC
NA2ARD NSE N2
Go)!*n/nc!Go)!*n/nc!
The &o+era$e o( NCDE +ests *ith the 2oar% o( Dire$tors. The 2oar%
$o#prises 18 Dire$tors *ho are persos o( e#ie$e, ea$h a authorit! i
hisher o* ri&ht i the areas +er! re'e+at to the E"$ha&e. The! are a''
*e'' ko*, hi&h'! e"perie$e% a% i%epe%et. ro#oters %o ot
parti$ipate i the %a! to %a! a$ti+ities o( the e"$ha&e. The %ire$tors are
S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE :6:6
http://www.ncdex.com/about_us/aboutus.aspx#can%23canhttp://www.ncdex.com/about_us/aboutus.aspx#crisil%23crisilhttp://www.ncdex.com/about_us/aboutus.aspx#gold%23goldhttp://www.ncdex.com/about_us/aboutus.aspx#icici%23icicihttp://www.ncdex.com/about_us/aboutus.aspx#iff%23iffhttp://www.ncdex.com/about_us/aboutus.aspx#lic%23lichttp://www.ncdex.com/about_us/aboutus.aspx#nabard%23nabardhttp://www.ncdex.com/about_us/aboutus.aspx#nse%23nsehttp://www.ncdex.com/about_us/aboutus.aspx#pnb%23pnbhttp://www.ncdex.com/about_us/aboutus.aspx#pnb%23pnbhttp://www.ncdex.com/about_us/aboutus.aspx#nse%23nsehttp://www.ncdex.com/about_us/aboutus.aspx#nabard%23nabardhttp://www.ncdex.com/about_us/aboutus.aspx#lic%23lichttp://www.ncdex.com/about_us/aboutus.aspx#iff%23iffhttp://www.ncdex.com/about_us/aboutus.aspx#icici%23icicihttp://www.ncdex.com/about_us/aboutus.aspx#gold%23goldhttp://www.ncdex.com/about_us/aboutus.aspx#crisil%23crisilhttp://www.ncdex.com/about_us/aboutus.aspx#can%23canhttp://www.ncdex.com/about_us/aboutus.aspx#can%23canhttp://www.ncdex.com/about_us/aboutus.aspx#crisil%23crisilhttp://www.ncdex.com/about_us/aboutus.aspx#gold%23goldhttp://www.ncdex.com/about_us/aboutus.aspx#icici%23icicihttp://www.ncdex.com/about_us/aboutus.aspx#iff%23iffhttp://www.ncdex.com/about_us/aboutus.aspx#lic%23lichttp://www.ncdex.com/about_us/aboutus.aspx#nabard%23nabardhttp://www.ncdex.com/about_us/aboutus.aspx#nse%23nsehttp://www.ncdex.com/about_us/aboutus.aspx#pnb%23pnb -
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appoite% i a$$or%a$e *ith the pro+isios o( the Arti$'es o( Asso$iatio o(
the $o#pa!. The oar% is resposi'e (or #aa&i& a% re&u'atio a'' the
operatios o( the e"$ha&e a% $o##o%ities trasa$tio. It (or#u'ates the
ru'es a% re&u'atio re'ate% to the operatios o( the e"$ha&e. 2oar%
appoits a e"e$uti+e $o##ittee a% other $o##ittee (or the purpose o(
#aa&i& a$ti+ities o( the e"$ha&e.
The e"e$uti+e $o##ittee $osists o( the Maa&i& Dire$tor o( the e"$ha&e
*ho *ou'% e a$ti& as the Chie( E"e$uti+e o( the e"$ha&e, a% a'so other
#e#ers appoite% ! the oar%.
Apart (ro# the e"e$uti+e $o##ittee the oar% has $ostitute $o##ittee 'ike
Me#ership Co##ittee, Au%it Co##ittee, Risk Co##ittee, No#iatio
Co##ittee, Co#pesatio Co##ittee a% 2usiess Strate&! Co##ittee
*hi$h he'p the oar% i po'i$! (or#u'atio.
E&c/n#! M!$2!*0(
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operatios. The #e#ers o( NCDE (a'' ito t*o $ate&ories, tra%i& $u#
C'eari& Me#ers BTCM ro(essioa' C'eari& Me#ers BCM.
T*/"(n# c'$ C!/*(n# M!$2!*0 TCM?0T*/"(n# c'$ C!/*(n# M!$2!*0 TCM?0
NCDE i+ites app'i$atios (or TCM (ro# persos *ho (u'(i'' the spe$i(ie%
e'i&ii'it! $riteria (or tra%i& i $o##o%ities. The TCM #e#ership etit'es
the #e#ers to tra%e a% $'ear, oth (or the#se'+es a% or o eha'( o(
their $'iets. App'i$ats a$$epte% (or a%#issio as TCM are re-uire% to pa!
the re-uire% (ees %eposits a% a'so #aitai et *orth as &i+e i the ta'e
e'o*H
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or eha'( o( their $'iets. App'i$ats a$$epte% (or a%#issio, as CMs are
re-uire% to pa! the (o''o*i& (ee %eposits a% a'so #aitai et *orth as
&i+e i the ta'e e'o*H
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spot a% (utures pri$es tra%e% o the E"$ha&e. NCDE is o* i the
pro$ess o( %isse#iati& oth spot a% (utures pri$es o these ter#ia's so
that (ar#ers $a $o#e a% +ie* the# a% take appropriate %e$isios ase%
o their o* per$eptios.
NCDE has a'so tie% up *ith the Go+er#et o( I%ias atioa' 'e+e' $a''
$etre iitiati+e tit'e% Kisa Ca'' Cetres that pro+i%es o'ie &ui%a$e a%
ha%ho'%i& to (ar#ers i the $outr!.
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a&&re&ator *ho*hi$h *i'' e se'e$te% (or this purpose. The i%ea is that the
(ar#ers shou'% e a'e to he%&e their pri$e risk o the NCDEs tra%i&
p'at(or# at a! poit o( ti#e prior to har+esti& *hee+er the! *ish so that
the! are assure% o( a (i"e% pri$e *he the $rop is har+este%. Ma! su$h
si#i'ar pi'ots are a'so ei& p'ae% (or other $rops i %i((eret states.
Co/%!*/ M/n/#!$!n% Co$
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$ertai spe$i(i$ (a$tors B'ike rati&s (or hote's to esure sta%ar%i4atio i
their pra$ti$es a% +a'uea%%itio to *arehouse users. The *arehouse re$eipt
itse'( *ou'% either e issue% ! this $o''atera' #aa&e#et $o#pa! or
$re%it eha$e% ! it. O$e $erti(ie% ! this $o#pa!, the *arehouse re$eipt
*ou'% e$o#e a $re%i'e #arketa'e 'e%i& istru#et (or aks. Further,
*or'% reo*e% assa!ers$erti(i$atio a&e$ies *ou'% pre$erti(! the &oo%s
kept i the *arehouse a% the %etai's *ou'% e spe$i(ie% i the *arehouse
re$eipt. The 'e%i& ak *ou'% o* e $ertai aout the autheti$it! o( the
pro%u$e store% i the *arehouse a% *ou'% e i a positio to 'e% #oe! to
the (ar#er at etter B'o*er rates as the $re%it rati& o( the (ar#er &ets
tras(or#e% auto#ati$a''! (ro# a 'o*er Bsa!, trip'e 2 to a hi&her Bsa!,
%ou'e A &ra%e. Thus, the (ar#ers *ou'% &et the (ia$e at $o#petiti+e
iterest rates. This *ou'% e a *i*i situatio (or a'' the p'a!ers
$o$ere%. C
Ho"(n# o9 co$$o"(%+ 2//nc!0 (n !!c%*on(c 9o*$ (n "!$/%!*(/(!"Ho"(n# o9 co$$o"(%+ 2//nc!0 (n !!c%*on(c 9o*$ (n "!$/%!*(/(!"
/cco'n%0 /n" "!()!*+/cco'n%0 /n" "!()!*+
NCDE has *orke% su$$ess(u''! to et*ork a$$re%ite%
*arehouses a% ea'e% ho'%i& o( $o##o%it! a'a$es i e'e$troi$ (or#
a% %e#ateria'i4e% the *arehouse re$eipt Bi partership *ith Natioa'
Se$urities Depositor! Li#ite% BNSDL a% the Cetra' Depositor! Ser+i$es
BI%ia Li#ite% BCDSL so as to ea'e s#ooth ph!si$a' $o##o%it!
sett'e#ets. The E"$ha&e *as the (irst to (a$i'itate ho'%i& o( $o##o%it!
a'a$es i a e'e$troi$ (or# +er! #u$h 'ike $ash i a sa+i&s ak a$$out
a% se$urities i a e'e$troi$ $usto%ia' a$$out. h!si$a' %e'i+er! i a
e'e$troi$ (or# B%e#at #o%e has a'rea%! take p'a$e i &o'%, si'+er, pepper,
&uar see% a% &uar &u#. E((orts are $urret'! u%er *a! to popu'ari4e the
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i%ea o( ho'%i& $o##o%it! a'a$es i a e'e$troi$ (or# ! retai' i+estors
a% pri+ate aki& &roupsport(o'io #aa&ers )ust as i e-uities *hi$h is
a'rea%! i +o&ue to%a!.
=o*k(n# =(% O%!* P/*%(c(:>:
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NCDE T*/"(n# S+0%!$NCDE T*/"(n# S+0%!$
NCDE has esta'ishe% re'ia'e, ti#e teste% a% trasparet tra%i&
p'at(or#s +er! si#i'ar to those ei& use% ! su$$ess(u' e'e$troi$ e-uit!
e"$ha&es. NCDE pro+i%es s$ree ase% tra%i& a% he$e it is possi'e
(or oe to p'a$e tra%es o the p'at(or# *ithout +isiti& the E"$ha&e.
C!/*(n# /n" S!%%!$!n% S+0%!$C!/*(n# /n" S!%%!$!n% S+0%!$
NCDE has a 'ar&e Sett'e#et Guaratee Fu% a% &uaratees the
sett'e#et o( a'' tra%es e"e$ute% o its tra%i& p'at(or# a$$or%i& to its
Ru'es, Re&u'atios a% 2!e La*s. NCDE has etere% ito a operatioa'
arra&e#et *ith NSCCL (or $'eari& a% sett'e#et o( tra%es e"e$ute%
throu&h the NCDE tra%i& s!ste#.
At the E"$ha&e, a'' $otra$ts, ot sett'e% throu&h %e'i+er! are to e $ash
sett'e%. At the e% o( tra%i& hours o the e"pir! %a! B7th o( e+er! #oth
(or #ost o( the $o##o%ities a% 6th (or a (e* $o##o%ities or the pre+ious
tra%i& %a! i( the 7th6th happes to e a Satur%a!, Su%a! or a ho'i%a!,
(or a'' ope positios i(or#atio (or %e'i+er! is sou&ht (ro# the #e#ers.
The C'eari& a% Sett'e#et S!ste# o( the E"$ha&e #at$hes %e'i+er!
i(or#atio a% the sett'e#et *i'' take p'a$e as per the %e'i+er! a%
sett'e#et s$he%u'e o( the E"$ha&e. h!si$a' sett'e#et *ou'% take p'a$e
i e'e$troi$ B%e#at (or# throu&h the a$$re%ite% *arehouses a% -ua'it!
$erti(i$atio a&e$ies. I (a$t, i Feruar! 779, *ithi 8 #oths o(
$o##e$i& operatios, NCDE su$$ess(u''! (a$i'itate% its (irst sett'e#et
o( %e'i+er! (or &o'% i %e#at (or#.
R(0k $/n/#!$!n%R(0k $/n/#!$!n%
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NCDE esures the (ia$ia' ite&rit! o( tra%es put throu&h o its
p'at(or# ! a%opti& opti#a' risk #aa&e#et pra$ti$es. NCDE as a
e"$ha&e %oes ot ha+e, i its &o+eriaa&e#et tea#, a! perso *ho
has a +este% iterest i $o##o%it! tra%i&. This ea'es NCDE to take a
$o#prehesi+e, uiase% a% pro(essioa' approa$h to risk #aa&e#et.
The aRSAN too's use% (or risk #aa&e#et stipu'atios a% $ross
#ar&ii& re-uire#ets are trasparet a% app'ie% ui(or#'! a$ross #arket
parti$ipats. I $o##o%it! (utures #arkets, #ar&i re-uire#ets are #et !
$o''e$tio o( %eposits, *hi$h are use% to $o+er a%+erse #o+e#ets i (utures
pri$es. ru%et risk #aa&e#et re-uires that #ar&i re-uire#ets o( the
E"$ha&e shou'% respo% to $ha&es i +o'ati'it! to esure that #e#ers are
a'e to #eet their $outer part! &uaratees. I the 'o& ru this esures
(ia$ia' %is$ip'ie i the #arket a% ai%s i the %e+e'op#et o( the #arket.
NCDE has, there(ore, a%opte% the *i%e'! a$$epte% s!ste# (or the purpose
o( rea'ti#e iitia' #ar&i $o#putatio. Iitia' #ar&i re-uire#ets are
ase% o 55 %ai'! aR Ba'ue at Risk. NCDE a'so pro+i%es positio
#oitori& a% #ar&ii&. ositio #oitori& is $arrie% out o a rea'ti#e
asis %uri& the tra%i& hours. Mar&is are re$a'$u'ate% itra%a! at 11 a.#.,
1.77 p.#., :.77 p.#. a% 6.77 p.#. a% o'! at 11.77 a.#. o Satur%a!s to
$apture the itra%a! +o'ati'it! i the (utures a% spot pri$es.
Other risk #aa&e#et too's 'ike %ai'! pri$e 'i#its a% e"posure #ar&is
ha+e ee a%opte% i 'ie *ith iteratioa' est pra$ti$es. Mar&is are
ette% at the 'e+e' o( i%i+i%ua' $'iet a% &rosse% a$ross a'' $'iets, at the
#e#er 'e+e', *ithout a! seto((s et*ee $'iets.
D(99!*!n%(/%(on 9/c%o*D(99!*!n%(/%(on 9/c%o*
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The %i((eretiati& (a$tors (or the E"$ha&e areH traspare$! i the
pri$e %is$o+er! #e$hais#, $osiste$! a% ease i $'eari& a% sett'e#et
pro$e%ures a% roustess o( risk #aa&e#et s!ste#s. The E"$ha&e
u%ersta%s the usiess ee%s o( its parti$ipats a% *i'' e%ea+our to o((er
(ia$i& so'utios to its #e#ers$'iets i $osu'tatio *ith se'e$t aks
a% (ia$i& a&e$ies.
C'0%o$!* !"'c/%(on /n" /w/*!n!00C'0%o$!* !"'c/%(on /n" /w/*!n!00
Despite a (air'! 'o& histor! o( %eri+ati+es tra%i& i I%ia, si&i(i$at
e%u$atio a% a*areess ee%s to e $reate% a#o&st a +ast #a)orit! o( the
popu'atio. I or%er to a$hie+e this, NCDE has %e+e'ope% $o#prehesi+e
traii& #o%u'es o $o##o%ities a% their %eri+ati+es pro$esses i o'ie
tra%i&, risk #aa&e#et pro$esses, et$. NCDE has ee $o%u$ti&
a*areess pro&ra##es a$ross the $outr! to hi&h'i&ht the opportuities i
the $o##o%it! spa$e, *hi$h ha+e ee +er! *e'' re$ei+e%. I the (irst ha'(
o( FY79, NCDE has a'rea%! $o%u$te% o+er 177 pro&ra##es *ith o+er
1,777 parti$ipats. The tar&et (or the (ia$ia' !ear FY7: is to $o%u$t 77
pro&ra##es *hi$h *i'' $o+er 7,777 parti$ipats. Most o( the pro&ra##es
are $o%u$te% i the +era$u'ar #e%iu# to esure that a etter rapport is
esta'ishe% *ith the parti$ipats. =ith i$rease% a*areess a% parti$ipatio
(ro# i+estorsrokers o( other seets su$h as e-uit! #arkets, the
$o##o%it! #arkets are e"pe$te% to %e+e'op (urther. The E"$ha&e has
itro%u$e% a $erti(i$atio $ourse (or its #e#ers aa'o&ous to the
$erti(i$atio $ourses (o''o*e% i the e-uit! seet o( the $apita' #arket
a% is $o%u$te% ! NSEs Certi(i$atio i Fia$ia' Markets BNCFM. This
is e"pe$te% to %eepe the ko*'e%&e o( operati& sta(( *orki& o
$o##o%it! %esks o( the Me#ers a% ea'e the# to take appropriate
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%e$isios at the ri&ht ti#e *hi'e tra%i& o the E"$ha&e. The E"$ha&e
re&u'ar'! ri&s out pro%u$t ro$hures, *hi$h e"p'ai the pro%u$ts a%
$otra$ts spe$i(i$atios o( the $o##o%ities tra%e% o the E"$ha&e. These
ro$hures are a'so i the pro$ess o( ei& tras'ate% a% prite% i 3i%i,
Gua)arati, Marathi, et$. Resear$h reports o the e$oo#!, u''io a% other
$o##o%ities are a'so rou&ht out i a e((ort to %isse#iate i(or#atio.
These ro$hures are a'so a+ai'a'e o the E"$ha&es *esite.
=!20(%!=!20(%!
The E"$ha&es *esite ***.$%e".$o# $otais a reser+oir o(
i(or#atio o the pro$esses a% operatios o( the E"$ha&e as *e'' as the
Ru'es, Re&u'atios a% 2!e'a*s u%er *hi$h the E"$ha&e is &o+ere%.
The *esite %isse#iates ear rea'ti#e spot a% (uture pri$es throu&h a
ti$ker. It is up%ate% re&u'ar'! so that a +isitor to the site is kept areast o( the
'atest %e+e'op#ets i the (ie'% o( $o##o%ities. NCDE (ir#'! e'ie+es
that it *ou'% a$hie+e its $hie( o)e$ti+e *he the I%ia (ar#er *ou'% e i
a positio to $hoose his $roppi& patter ase% o the (utures pri$es
%isse#iate% ! the E"$ha&e, rather tha the pra$ti$e o( so*i& a parti$u'ar
$rop ase% o $urret pri$es. The $ha''e&e is to (irst rea$h hi# a%
$o+i$e hi# o( the uti'it! o( a%opti& the (utures pri$es to %eter#ie the
so*i& patter o( $rops. The E"$ha&e %oes rea'i4e that *ith e+er! passi&
%a! it is #o+i& a step $'oser to a$hie+i& this o)e$ti+e. Easi& o( $ertai
operatioa' a% 'e&a' hur%'es *ou'% (urther haste this pro$ess.
F'%'*! 5
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NCDE $ostat'! p'as to *i%e the #eu o( pro%u$ts a+ai'a'e (or
tra%i& to i$'u%e, esi%es other a&ri$u'tura' pro%u$ts, ase #eta's, p'asti$s,
eer&! pro%u$ts a% i%i$es Bi$'u%i& *eather. Suita'e re&u'ator!
$ha&es *ou'% e re-uire% e(ore the E"$ha&e $ou'% o((er $otra$ts i
so#e o( these, espe$ia''! *ith re&ar% to e'e$tri$it! a% i%i$es. The i%ea is to
#ake a+ai'a'e to the peop'e the etire ra&e o( $o##o%ities a% ot e
restri$te% to a $ertai $ate&or! o( pro%u$ts. I (a$t, NCDE o+er a perio% o(
ti#e aspires to e$o#e a &'oa''! a''e$o#passi& $o##o%it! e"$ha&e
a% e a p'at(or# *hose pri$es *ou'% e a poit o( re(ere$e to a'' users ot
o'! i the $outr! ut e+e &'oa''!.
Thus, NCDE is $o##itte% to pro+i%e a *or'%$'ass $o##o%it! e"$ha&e
p'at(or# (or #arket parti$ipats to tra%e i a *i%e spe$tru# o( $o##o%it!
%eri+ati+es %ri+e ! est &'oa' pra$ti$es, te$ho'o&!, pro(essioa'is# a%
traspare$!.
Co$$o"(%(!0 )!*0'0 o%!* /00!% c/00!0Co$$o"(%(!0 )!*0'0 o%!* /00!% c/00!0
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S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE 66
S%ock Bon"0 Co$$o"(%(!0
P*($/*+
O2@!c%()!
Capita' &ais,
a'thou&h it ears
i$o#e i (or#
o( %i+i%e%.
I$o#e i
pri#ar!
o)e$ti+e *hi'e
a $apita' &ai is
se$o%ar!
Etire'! $apita' &ai
a% o i$o#e at a''
e"$ept (or possi'e
asset 'e%i&
i$o#e i u''io
a% other rare $ases.C/($ on The! are $'ai#
o 'o& 'i+e%
$orporatios.
The! are $'ai#s
o 'o& 'i+e%
$orporatios or
&o+er#et
The! are short
#aturit! $'ai#s o
rea' assets
S%o*/#! Easi'! store% i
%e#at (or# or a
ph!si$a' paper.
Easi'! store% i
%e#at (or# or a
ph!si$a' paper
Di((i$u't i stori&,
*arehousi& a%
trasportatio.Co$ept o( %e#at
a$$out $at$hi& i
$o##o%it!
e"$ha&es.
S!c'*(%(!0
%*/n0/c%(on /c%
/n" /
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P*!c(o'0 M!%/ Go"P*!c(o'0 M!%/ Go"
Go'% J rare, eauti(u' a% ui-ue. Treasure% as a store o( +a'ue (or 1777s o(
!ears, it is a i#portat a% se$ure asset. aper $urre$ies #a! $o#e a% &o
ut &o'% e%ures. It has #aitaie% its 'o& ter# +a'ue, is ot %ire$t'!
a((e$te% ! the e$oo#i$ po'i$ies o( the i%i+i%ua' $outries a% %oes ot
%epe% o a @pro#ise to pa!
Go" /0 / 0/9! !/)!nGo" /0 / 0/9! !/)!n
Go'% is a#o& o'! a ha%(u' o( (ia$ia' assets that is ot #at$he% ! a
'iai'it!. It $a pro+i%e isura$e a&aist e"tre#e #o+e#ets o the +a'ue
o( tra%itioa' asset $'asses that $a happe i usett'e% ti#es.
A "(99!*!n% c/00 o9 /00!%A "(99!*!n% c/00 o9 /00!%
Most i+est#et port(o'ios are i+este% pri#ari'! i tra%itioa' (ia$ia'
assets su$h as sto$ks a% o%s, as sho* i the ta'e e'o*H
Do#esti$
e-uities
B
Iteratioa'
e-uities
B
Do#esti$
o%s
B
Iteratioa'
o%s
B
Cash
B
Rea'
estate
B
Other
B
11 11 1 >
Sour$eH
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The reaso (or ho'%i& %i+erse i+est#ets is to prote$t the port(o'io a&aist
('u$tuatios i the +a'ue o( a! si&'e asset $'ass.
ort(o'ios that $otai &o'% are &eera''! #ore roust a% etter a'e to $ope
*ith #arket u$ertaities tha those that %ot.
A%%i& &o'% to a port(o'io itro%u$es a etire'! %i((eret $'ass o( asset.
Go'% is uusua' e$ause it is oth a $o##o%it! a% a #oetar! asset. It is a
e((e$ti+e %i+ersi(ier e$ause its per(or#a$e te%s to #o+e i%epe%et'!
o( other i+est#ets a% ke! e$oo#i$ i%i$ators.
Re$et i%epe%et stu%ies ha+e sho* that tra%itioa' %i+ersi(iers Bsu$h as
o%s a% a'terati+e assets o(te (ai' %uri& ti#es o( #arket stress or
istai'it!. E+e a s#a'' a''o$atio o( &o'% has ee pro+e to si&i(i$at'!
i#pro+e the $osiste$! o( port(o'io per(or#a$e %uri& oth sta'e a%
usta'e (ia$ia' perio%s.
I$
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Aa'!sis o( the 'o& ru sho*s that returs o &o'% ha+e #o+e%
i%epe%et'! o( returs o other assets (or a 'o& ti#e a% are 'ike'! to
re#ai u$orre'ate% e$ause the (a$tors that %ri+e the &o'% pri$e are -uite
%i((eret (ro# those that %ri+e #ost other assets.
Go'% is a'so si&i(i$at'! 'ess +o'ati'e tha #a! e-uit! i%i$es a% #ost
$o##o%ities. I this respe$t it te%s to eha+e #ore 'ike a $urre$!. Si#p'!
! re%u$i& port(o'io +o'ati'it!, eha$e% returs $a e e"pe$te% as
%e#ostrate% i the ta'e e'o*H
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port(o'io 1
B'o* +o'ati'it!
port(o'io
Bhi&h +o'ati'it!
aua'
retur
+a'ue
aua'
retur
+a'ue
iitia' +a'ue 17,777 17,777
!ear e% 15 17,577 : 5,:77
!ear e% 1 1,755 : 11,?6:
!ear e% 8 5 18,1?? : 11,?1
!ear e% 9 11 19,>5 : 19,17!ear e% : 5 1:,5:> : 18,85>
!ear e% > 11 16,611 : 1>,69>
arith#eti$ a+. retur 17 17
st%. %e+iatio 1.17 1>.98
$o#pu% retur 5.55> ?.56
I$'u%i& assets *ith 'o* +o'ati'it! i a port(o'io *i'' a'so he'p to re%u$e
o+era'' risk. o'ati'it!, or risk, is #easure% here as the e"tet to *hi$h asset
pri$es ('u$tuate %uri& a &i+e perio%.
The $hart e'o* $o#pares the +o'ati'it!o( &o'% *ith that o( oi' a% sto$ks
et*ee 77 a% Feruar! 77>. The pri$e +o'ati'it! o( &o'% is &eera''!
si#i'ar to that o( a 'ue$hip sto$k #arket i%e" 'ike the S :77. I$reases
i +o'ati'it! are &eera''! asso$iate% *ith &o'% pri$e ra''ies.
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DataH G'oa' Isi&ht, =GC
Go'% $a e use% to #aa&e a ra&e o( other risks that $o$er i+estors,
i$'u%i& e"posure to %o''ar ('u$tuatios a% uati$ipate% i('atio. This
+ersati'it!, a% its 'o&sta%i& histor! as a sa(e ha+e asset, attra$ts
i+estors arou% the *or'%.
Go" /0 /n /%!*n/%()! (n)!0%$!n%Go" /0 /n /%!*n/%()! (n)!0%$!n%
I the sear$h (or e((e$ti+e %i+ersi(i$atio a&aist a a$k&rou% o( i$reasi&
$o+er&e$e a#o& #aistrea# asset $'asses, i+estors are $osi%eri& a
+ariet! o( otra%itioa' a'terati+e i+est#et +ehi$'es. ro#iet a#o&
these are he%&e a% pri+ate e-uit! (u%s, a'thou&h &o'%, $o##o%ities,ti#er a% (orestr!, (ie art a% $o''e$ti'es #a! a'so $o#e u%er re+ie*.
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I+estors shou'% &i+e $are(u' $osi%eratio to ea$h o( these a'terati+es i
the 'i&ht o( their parti$u'ar re-uire#ets a% #a! $hoose to i+est i se+era'
o( the#.
Despite its re'ati+e'! 'o* e"pe$te% returs &o'% o((ers superior
%i+ersi(i$atio *ith hi&h 'i-ui%it! a% 'o* $ost.
Go" S'
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En!*#+ Co$$o"(%+ C*'"! O(En!*#+ Co$$o"(%+ C*'"! O(
C*'"! O(C*'"! O(
Cru%e, o(te re(ere% to as @2'a$k Go'% is oe o( the hea+i'! tra%e%
$o##o%ities i the Iteratioa' s$eario. The 'e+e' o( $osu#ptio o(
$ru%e ! a $outr! $a e use% as a pro"! (or #easuri& the e$oo#i$
%e+e'op#et.
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$ru%e. =hee+er the $ru%e pri$es #o+e to a e$oo#i$ 'e+e', the $outr!
%ips ito its reser+es to #eet the %o#esti$ %e#a% a% rep'eishes the sa#e
*he the pri$es #o+e %o*. I%ia %oes ot ha+e su$h hu&e stora&e
arra&e#ets a% he$e %epe%s $o#p'ete'! o its i#ports. Cru%e ei& the
hi&hest +a'ue e'e#ets i our i#ports is a i& (a$tor a((e$ti& our 2a'a$e o(
a!#ets B2O.
R!9(n(n#R!9(n(n#
The i#porte% $ru%e *i'' ha+e to e re(ie% to pro%u$e the $osu#a'e(or# o( Gaso'ie, ATF, Fura$e Oi', Diese' et$ (or this e+er! $outr! *i''
ha+e their o* re(ieries setup. So#e o( the reaso *h! the $ru%e oi' pri$es
*et up is e$ause o( terrorist atta$ks o re(ii& ista''atios a% atura'
$a'a#ities 'ike hurri$aes, $!$'oes a% tora%oes.
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C/0! S%'"+C/0! S%'"+
S'$(%o$o Co*th $etur!. The (ir *as e&a&e% i
s#e'ti& si'+er a% $opper. Three &eeratios 'ater, the (ir ha% e"pa%e% ito
aki& ! opei& a #oe! $ha&i& store i Osaka. The (ir# e$a#e a
pro#iet or&ai4atio *he it %is$o+ere% $opper #ies i 1>57. A(ter (e*
$eturies o( su$$ess(u' usiess, the (ir# *as i$orporate% as Su#ito#o
Corporatio i 1515.
H/$/n/k/ Y/0'o %! %*/"!*H/$/n/k/ Y/0'o %! %*/"!*
Mr. 3a#aaka Yasuo, 'o$a' ;apaese, )oie% Su#ito#o Corporatio i
Apri' 1567 at its Tok!o hea% -uarters as a $'erk. 2! that ti#e, the $o#pa!
*as e&a&e% i 'ar&e s$a'e $opper usiess a$ti+it!. I 1568 or so, Mr
3a#aaka Yasuo *as aske% to he'p the #arketi& a% he%&i& o( the
$o#pa!s $opper usiess. Fi+e !ears 'ater i 156? he ha% e$o#e the hea%
o( $opper he%&i& tra%er.
M*. 5
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Duri& this perio%, 3a#aaka rose to (a#e throu&h his $'e+er #arket
%ea'i&s. 3e ha% eare% a i$k a#e /Mr. :0, re('e$ti+e o( the share o( the
*or'% $opper #arket that he suppose%'! $otro''e% o eha'( o( his
$o#pa!, Su#ito#o Corporatio. 3e a'so ha% aother i$k a#e /Mr.
3a##er0 to portra! his ai'it! to ha##er the $opper #arket. O+ious'!, the
$orporati