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MARKET a Market is Conventionally Defined as a Place Where Buyers and Sellers Meet to Exchange Goods or Services for a Consideration

MARKET a Market is Conventionally Defined as a Place Where Buyers and Sellers Meet to Exchange Goods or Services for a Consideration

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Published by: anon_252729187 on Dec 04, 2012
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MARKET
A market is conventionally defined as a place where buyers and sellers meet toexchange goods or services for a consideration. This consideration is usually money. In anInformation Technology-enabled environment, buyers and sellers from different locations cantransact business in an electronic marketplace. Hence the physical marketplace is not necessaryfor the exchange of goods or services for a consideration.Electronic trading and settlement of transactions has created a revolution in global financial andcommodity markets.
COMMODITY
A commodity is a product that has commercial value, which can be produced,bought, sold, and consumed. Commodities are basically the products of the primary sector of aneconomy. The primary sector of an economy is concerned with agriculture and extraction of rawmaterials such as metals, energy (crude oil, natural gas), etc., which serve as basic inputs for thesecondary sector of the economy. In India there are 25 recognized future exchanges, of whichthere are four national level multi-commodity exchanges. After a gap of almost three decades,Government of India has allowed forward transactions in commodities through OnlineCommodity Exchanges, a modification of traditional business known as Adhat and VaydaVyapar to facilitate better risk coverage and delivery of commodities.The four exchanges are:
NMCE (National Multi Commodity Exchange of India Ltd.)
NMCE is the first demutualised electronic commodity exchange of India granted the Nationalexchange on Govt. of India and operational since 26th Nov, 2002.Promoters of NMCE are, Central warehousing corporation (CWC), National AgriculturalCooperative Marketing Federation of India (NAFED), Gujarat Agro-Industries CorporationLimited (GAICL), Gujarat state agricultural Marketing Board (GSAMB), National Institute of Agricultural Marketing (NIAM) and Neptune Overseas Ltd. (NOL). Main equity holders arePNB.The Head Office of NMCE is located in Ahmedabad. There are various commodity trades onNMCE Platform including Agro and non-agro commodities.
2 NCDEX (National Commodity & Derivates Exchange Ltd.)
NCDEX is a public limited co. incorporated on April 2003 under the Companies Act 1956, Itobtained its certificate for commencement of Business on May 9, 2003. It commenced itsoperational on Dec 15, 2003.Promoters shareholders are: Life Insurance Corporation of India (LIC), National Bank forAgriculture and Rural Development (NABARD) and National Stock Exchange of India (NSE)
 
other shareholder of NCDEX are: Canara Bank, CRISIL limited, Goldman Sachs,Intercontinental Exchange (ICE), Indian farmers fertilizer corporation Ltd (IFFCO) and PunjabNational Bank (PNB).NCDEX is located in Mumbai and currently facilitates trading in 57 commodities mainly in Agroproduct.
3 MCX (Multi Commodity Exchange of India Ltd.)
Headquartered in Mumbai, MCX is a demutualised nation wide electronic commodity futureexchange. Set up by Financial Technologies (India) Ltd. permanent recognition fromgovernment of India for facilitating online trading, clearing and settlement operations for futuremarket across the country. The exchange started operation in Nov, 2003.MCX equity partners include, NYSE Euronext,, State Bank of India and its associated,NABARD NSE, SBI Life Insurance Co. Ltd. , Bank of India, Bank of Baroda, Union Bank of India, Corporation Bank, Canara Bank, HDFC Bank, etc.MCX is well known for bullion and metal trading platform.
4 ICEX (Indian Commodity Exchange Ltd.)
ICEX is latest commodity exchange of India Started Function from 27 Nov, 09. It is jointlypromote by Indiabulls Financial Services Ltd. and MMTC Ltd. and has Indian Potash Ltd.KRIBHCO and IFC among others, as its partners having its head office located at Gurgaon(Haryana).
 
MAJOR REGIONAL COMMODITY EXCHANGES IN INDIA
a) BATINDA COMMODITY & OIL EXCHANGE LTD.b) THE BOMBAY COMMODITY EXCHANGEc) THE RAJKOT SEEDS OIL AND BULLION MERCHATd) THE KANPUR COMMODITY EXCHANGEe) THE MEERUT AGRO COMMODITY EXCHANGE THE SPICES AND OILSEEDSEXCHANGE (SANGI)f) AHEMDABAD COMMODITY EXCHANGEg) VIJAY BEOPAR CHAMBER LTD. (MUZAFFARNAGAR)h) INDIA PEPPERS AND SPICE TRADE ASSOCIATION ( KOCHI )
 
i) RAJDHANI OILS AND SEEDS EXCHANGE ( DELHI ) j) THE CHAMBER OF COMMERCE (HAPUR)k) THE EAST INDIA COTTON ASSOCIATION (MUMBAI)l) THE CENTRAL COMMERCIAL EXCHANGE ( GWALIOR )m) THE EAST INDIA JUTE & HESSIAN EXCHANGE OF INDIA (KOLKATA)n) FIRST COMMODITY EXCHANGE OF INDIA ( KOCHI )o) BIKANER COMMODITY EXCHANGE LTD. ( BIKANER )p) THE COFEE FUTURE EXCHANGE LTD. ( BANGALORE )q) E SUGAR INDIA LTD. (MUMBAI).
.
INSTRUMENTS AVAILABLE FOR TRADING
In recent years, derivatives have become increasingly popular due to their applications forhedging, speculation and arbitrage.While futures and options are now actively traded on many exchanges, forward contracts arepopular on the OTC market.While at the moment only commodity futures trade on the NCDEX, eventually, as the marketgrows, we also have commodity options being traded.
FORWARD CONTRACTS
A forward contract is an agreement to buy or sell an asset on a specified date for a specifiedprice.One of the parties to the contract assumes a long position and agrees to buy the underlying asseton a certain specified future date for a certain specified price. The other party assumes a shortposition and agrees to sell the asset on the same date for the same price. Other contract detailslike delivery date, price and quantity are negotiated bilaterally by the parties to the contract. Theforward contracts are normally traded outside the exchanges.The salient features of forward contracts are:-party risk.

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