A STUDY OF EVOLUTION AND REGULATION OF COMMODITY MARKET WITH BENEFITS AND CURRENT SCENARIO IN INDIA

Abstract

India is one of the top producers of a large number of commodities, and also has a long history of trading in commodities and related derivatives. The commodities derivatives market has seen ups and downs, but seem to have finally arrived now. The market has made enormous progress in terms of technology, transparency and the trading activity. India is among the top-5 producers of most of the commodities, in addition to being a major consumer of bullion and energy products, which needs use of futures and derivatives as price-risk management system. Fundamentally price you pay for goods and services depend greatly on how well business handle risk. By using effectively futures and derivatives, businesses can minimize risks, thus lowering cost of doing business. Commodity players use it as a hedge mechanism as well as a means of making money. Current futures volumes are miniscule compared to underlying spot market volumes and thus have a tremendous potential in the near future.