Volume : IV, Issue : II, February - 2015

COMMODITY MARKET-CURRENT SCENARIO

Mr. L. Rajendran

Abstract :

The history of organized commodity derivatives in India goes back to the nineteenth century when Cotton Trade Association started futures trading in 1875, about a decade after they started in Chicago. Over the time datives market developed in several commodities in India. Following Cotton, derivatives trading started in oilseed in Bombay (1900), raw jute and jute goods in Calcutta (1912), Wheat in Hapur (1913) and Bullion in Bombay (1920). However many feared that derivatives fuelled unnecessary speculation and were detrimental to the healthy functioning of the market for the underlying commodities, resulting in to banning of commodity options trading and cash settlement of commodities futures after independence in 1952. The parliament passed the Forward Contracts (Regulation) Act, 1952, which regulated contracts in Commodities all over the India. The act prohibited options trading in Goods along with cash settlement of forward trades, rendering a crushing blow to the commodity derivatives market. Under the act only those associations/exchanges, which are granted reorganization from the Government, are allowed to organize forward trading in regulated commodities. The act envisages three tire regulations: (i) Exchange which organizes forward trading in commodities can regulate trading on day–to–day basis; (ii) Forward Markets Commission provides regulatory oversight under the powers delegated to it by the central Government. (iii) The Central Government– Department of Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution– is the ultimate regulatory authority.

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Article: Download PDF    DOI : https://www.doi.org/10.36106/gjra  

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Mr.L.Rajendran COMMODITY MARKET-CURRENT SCENARIO Global Journal For Research Analysis, Vol: 4, Issue: 2 February 2015

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