comodity

Chapter-1

1. 2. 3. 4. 5. Future trading commenced first on Chicago Board of trade. Derivative first emerged as hedging product. National Commodity Derivatives Exchange offers commodity derivatives trading. OTC derivatives are considered risky because there is no formal margining system. The first exchange traded financial derivative in India commenced with the trading of Index future. 6. A Forward is the simplest derivative contract. 7. In a transaction, trading involves the buyer and seller agreeing upon a price. 8. In a transaction, clearing involves the buyer and seller exchanging goods and money. 9. In a transaction, settlement involves the buyer and seller calculating the net outstanding. 10. A forward contract is an agreement between two entities. 11. Future contracts are standardized and exchange traded. 12. Longer dated options are called warrants and are generally traded over the counter. 13. Participants in the derivatives market are – hedgers, speculators & arbitragers. 14. Derivative markets can broadly be classified as commodity derivative market and financial derivative market. 15. Commodity derivatives market trade contracts for which the underlying asset is a commodity like agricultural commodity or precious metals. 16. The more popular financial derivatives are those which have equity, interest rates, foreign exchange as the underlying.

National Stock Exchange does not offer commodity derivative trading. 4. 6.Chapter-2 1. interstate movement of commodities. 2. The Kabra Committee recommended that the forward market commission (FMC) and the forward contract (regulation) Act. 5. the clearing corporation identifies the buyer to whom the delivery notice is assigned. 10. Typically. . A seller of a commodity future has the option to give notice of delivery during a period identified as ‘delivery notice period’ 7. delivery notice is required to be supported by a warehouse receipt. Whenever delivery notices are given by the seller. state level octroi and duties. in all commodity exchanges. The issues faced in physical settlement of commodities are varying quality of assets. The clearing corporation identifies the buyer to whom the delivery notice is assigned. Any seller/buyer who has who has given intention to deliver/been assigned a delivery has an option to square off positions till the market close of the day of delivery notice. 3. warehousing. Physical settlement involves the physical delivery of the underlying commodity at an accredited warehouse. 8. 1952. 9. need to be strengthened.

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