Derivatives Final Document 100marks

8/11/2019 Derivatives Final Document 100marks

1/90

DerivativesDerivatives

A PROJECT ON DERIVATIVES

SUBMITTED BY PRIYANKA MOHAN PISAT.

ROLL NO 38SUBMITTED TO S.K SOMAIYA COLLEGE OF

SCIENCE, ARTS AND COMMERCE.

S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE 11


2/90


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.

S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE


3/90


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



4/90


$'ass o( e-uit! %eri+ati+es, (utures a% optios o sto$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.



5/90


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#*/


6/90


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'!.


7/90


*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 to&ether. A &roup o( tra%ers &ot to&ether 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



8/90


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.

S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE ??


9/90


P*o"'c%0, P/*%(c(


10/90


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.



11/90


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



12/90


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(/ "!*()/%()!


13/90


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



14/90


%i((er (ro# (or*ar% $otra$ts i the sese that the! are sta%ar%i4e% a%

e"$ha&e tra%e%.

O


15/90


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/


16/90


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

S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE 1>1>


17/90


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



18/90


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.

S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE 1?1?


19/90


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.


20/90


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



21/90


O)!* %! Co'n%!*>S


22/90


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.

S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE


23/90


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.



24/90


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!



25/90


#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


26/90


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.

S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE >>


27/90


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


28/90


#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.



29/90


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


30/90


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


31/90


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


32/90


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



33/90


$ertai a#out o(, sa! &oo% i a *arehouse a% &ets a *arehouse re$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(



34/90


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%


35/90


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.

S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE 8:8:


36/90


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



37/90


'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"(%+


38/90


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#


39/90


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


40/90


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



41/90


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'%


42/90


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!.



43/90


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%



44/90


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



45/90


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.



46/90


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



47/90


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



48/90


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%

S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE 9?9?


49/90


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'.



50/90


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.

L/%!0% D!)!o


51/90


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

S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE :1:1


52/90


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.

S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE ::


53/90


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 ? ##



54/90


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$,


55/90


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*/"

7:7 K/


56/90


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


57/90


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

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


58/90


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(


59/90


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

F!!> D!


60/90


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

F!!> D!7>7


61/90


S


62/90


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!.


63/90


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/#!$!n% Co$


64/90


$ertai spe$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

S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE >9>9


65/90


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(:>:


66/90


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%

S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE >>>>


67/90


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*

S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE >6>6


68/90


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

S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE >?>?


69/90


%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
http://www.ncdex.com/http://www.ncdex.com/


70/90


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



71/90




72/90



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" /


73/90


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


74/90


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$


75/90


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

http://www.gold.org/pub_archive/index.php?thisDomainID=value&thisSubDomainID=index.htmlhttp://www.gold.org/pub_archive/index.php?thisDomainID=value&thisSubDomainID=index.html


76/90


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.

http://www.gold.org/value/stats/statistics/investment/index.htmlhttp://www.gold.org/value/stats/statistics/investment/index.html


77/90


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*.



78/90


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'


79/90




80/90


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.

D*()!*0 o9 c*'"!


81/90


$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.

S.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCES.K. SOMAIYA COLLEGE OF ARTS, SCIENCE AND COMMERCE ?1?1


82/90


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



83/90


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

Documents

Derivatives Final Document 100marks