Company profile mba final proojectDocument Transcript
COMPANY PROFILE:LMSPL Group Company:Latin Manharlal Securities, set up in the year 1989, has grown over a period inexperience and serving ever growing clientele in the Capital Market and F&OSegment. Spread over many states in the country, we cater to more than 22000clients in Gujarat, Maharashtra, Rajasthan, Bhubaneswar, Hyderabad,Bangalore, Vishakhapatnam and Chennai.The firm was corporatized in the name of M/s Latin Manharlal Securities Pvt.Ltd. in the year 1997. The company is a Trading and Clearing Member Brokerregistered with both the exchanges (BSE/NSE) Under Cash, F&O Segments andRegistered Trading Member under Currency Derivative Segment.The Company has well furnished/equipped offices in Mumbai & other cities inIndia. Based on the principles of team work and collective knowledge LMSPLhas its own research department run by highly experienced and qualifiedprofessionals who pride themselves in providing on-line news research andanalysis.Today the needs of the increasing Demat holdings of the clients are serviced byAsset Alliance Securities Pvt. Ltd., a depository participant (CDSL). Besides,Mutual Fund Distribution, IPO participation for the clients and Institutionalbroking are also provided by this Company. The commodity market is wellserviced by M/s Latin Manharlal Commodities Pvt. Ltd.We understand the increasing needs of the market and the demands of ourclients and we are committed and disciplined to give our best to satisfy theseneeds.
Latin Manharlal Commodities Pvt. Ltd.:-Virochana Commodities Pvt. Ltd. Was incorporated in the year May "2006.The Markets are growing and so are the various possibilities of investment.Today, the market regulator has eased restrictions on futures trading incommodities spread over Agro commodities, Bullions and Base Metals.Keeping in step with the growing investment potential and the need of differentasset class..Virochana Commodities Pvt. Ltd. Was renamed to Latin ManharlalCommodities Pvt. Ltd. Which got established in the year August 2008 toprovide services in Commodities and Futures Markets?Latin Manharlal Commodities Pvt. Ltd. Holds a membership of both the Multi-Commodity Exchange of India (MCX), and National Commodity andDerivatives Exchange (NCDEX) and also an trading member at Dubai GoldCommodity Exchange (DGCX)We Have Online Futures trading in the highly liquefied manner which can beglobally accessed and in the most transparent International commodities likeGold, Silver , Crude oil and in Agro-Commodities as well.We also provide with Daily Morning informative updates in terms of reports,global events and also daily technical calls for daily trading and positionaltrades with fundamental reasons.
Milestones of LMSP securities- December 09, 1999 Bombay Stock Exchange Ltd - Cash June 20, 2000 Bombay Stock Exchange Ltd - F&O November 21, 2000 National Stock Exchange of India Ltd – Cash February 06, 2006 National Stock Exchange of India Ltd - F&O National Stock Exchange of India Ltd - September 15, 2008 Currency Derivatives Bombay Stock Exchange Ltd - Currency September 18, 2008 Derivatives June 26, 2009 MCX Stock Exchange Ltd. SEBI Registration for Portfolio September 09, 2009 Management service.. June 03, 2005 CDSL * (*Asset Alliance Securities Pvt. Ltd.)
Introductions of commodity market:What is commodity? A commodity is an article of commerce or trade that is in demand and sold by various suppliers without any qualitative differentiation. It is a product that is the same no matter who produces it, such as petroleum, notebook paper, or milk. Commodities are raw or primary products and the exchanges where these goods are traded are known as Commodity Markets. Different markets trade different commodities. Oil is the most tradedcommodity in the world, with coffee coming in second place. Because many commodities are mined or produced in various countries, more and more companies are seeking the Fair Trade designation. This allows an investor to choose to invest in commodities that are produced using fair wages for laborers, regulated working conditions, etc. Investors with a social conscience may use this designation as one of their criteria when investing in foreign commodities. Commodity measurements are regulated and inspected by Measurement Canada, working within The Weights and Measures Act. This helps to ensure that investors can trust that the commodity they choose to invest in has been accurately weighed and measured. While commodities are produced for both domestic and foreign markets, some are regulated within this country to ensure a balance between supply and demand. This regulation of commodities such as poultry, eggs and dairy helps to ensure a safe return for investors. The commodity market is a geographical location where the seller and buyer meet to transfer the ownership of goods from the former to the latter through negotiation at mutually agreed value. For a commodity market to be functioning, the important ingredients are commodity, buyer and seller.
The market place may be organized or unorganized depending upon theaggregation of the buyer and seller at certain geographical location and ata certain given time.With the development of various means of communication, developmentof storage system, better means of transportation and the advancedform of payment has broadened the definition of the commodity market.Commodity is divided in various categories based on the source ofproduction like agri and non agri. Non agri commodity is again dividedamong metals and energy. Metals are divided into precious such as steel,copper etc. Based on the storability factor, like perishableitems include vegetables, fruits and milk and non perishable items includemetals or semi perishable like cereals and pulses.World-over, one will find that a market exits for almost all thecommodities known to us. These commodities can be broadly classifiedinto the following:The commodity markets have their origins in the ancient civilization ofSumer in southern Iraq. Tokens were used to trade commodities. Thisincluded specific timeframes and the delivery of commodities, just likecontemporary futures contracts.By the 19 century, the crude commodity markets paved the way formodern, regulated and standardized markets in the US, where agriculturalproducts and cattle were traded.The modern commodity markets have their roots in the traded. Themodern commodity markets have their roots in the trading of agriculturalproducts.The commodities market exits in two distinct forms namely the over thecounter (OTC) market and the exchange based market. The OTC marketsare essentially spot markets and are localized for specific commodities.Almost all the trading that takes place in these markets is delivery based.The spot markets are essentially over the counter markets and theparticipation is restricted to people who are involved with that commoditysay the farmer, processor, wholesaler etc. In addition to the spottransactions, forward deals also take place in these markets.However, they too happen on a delivery basis and hence are restricted tothe participants in the spot markets. Majority of the derivative tradingtakes place through exchange – based markets which is called futurescommodity market, with standardized contracts, settlements etc.
What is a commodity exchange? A commodity exchange is an association or a company or any other body corporate organizing futures trading in commodities for which license has been granted by regulating authority. What is Commodity Futures? A Commodity futures is an agreement between two parties to buy or sell a specified and standardized quantity of a commodity at a certain time in future at a price agreed upon at the time of entering into the contract on the commodity futures exchange. The need for a futures market arises mainly due to the hedging function that it can perform. Commodity markets, like any other financial instrument, involve risk associated with frequent price volatility. The loss due to price volatility can be attributed to the following reasons:History of commodity market in India:-History of Evolution of commodity markets Commodities future trading was evolved from need of assured continuoussupply of seasonal agricultural crops. The concept of organized trading incommodities evolved in Chicago, in 1848. But one can trace its roots in Japan.In Japan merchants used to store Rice in warehouses for future use. To raisecash warehouse holders sold receipts against the stored rice. These were knownas “rice tickets”. Eventually, these rice tickets become accepted as a kind ofcommercial currency. Latter on rules came in to being, to standardize thetrading in rice tickets. In 19th century Chicago in United States had emerged as amajor commercial hub. So that wheat producers from Mid-west attracted here tosell their produce to dealers & distributors. Due to lack of organized storagefacilities, absence of uniform weighing & grading mechanisms producers oftenconfined to the mercy of dealers discretion. These situations lead to need ofestablishing a common meeting place for farmers and dealers to transact in spotgrain to deliver wheat and receive cash in return.
Gradually sellers & buyers started making commitments to exchangethe produce for cash in future and thus contract for “futures trading” evolved.Whereby the producer would agree to sell his produce to the buyer at a futuredelivery date at an agreed upon price. In this way producer was aware of whatprice he would fetch for his produce and dealer would know about his costinvolved, in advance. This kind of agreement proved beneficial to both of them.As if dealer is not interested in taking delivery of the produce, he could sell hiscontract to someone who needs the same.Similarly producer who not intended to deliver his produce to dealer could passon the same responsibility to someone else.The price of such contract woulddependent on the price movements in the wheat market. Latter on by makingsome modifications these contracts transformed in to an instrument to protectinvolved parties against adverse factors such as unexpected price movementsand unfavorable climatic factors. This promoted traders entry in futures market,which had no intentions to buy or sell wheat but would purely speculate on pricemovements in market to earn profit. Trading of wheat in futures became very profitable which encouragedthe entry of other commodities in futures market. This created a platform forestablishment of a body to regulate and supervise these contracts. That’s whyChicago Board of Trade (CBOT) was established in 1848. In 1870 and 1880s theNew York Coffee, Cotton and Produce Exchanges were born. Agriculturalcommodities were mostly traded but as long as there are buyers and sellers, anycommodity can be traded. In 1872, a group of Manhattan dairy merchants gottogether to bring chaotic condition in New York market to a system in terms ofstorage, pricing, and transfer of agricultural products. In 1933, during the GreatDepression, the Commodity Exchange, Inc. was established in New York throughthe merger of four small exchanges – the National Metal Exchange, the RubberExchange of New York, the National Raw Silk Exchange, and the New York HideExchange.The largest commodity exchange in USA is Chicago Board of Trade, The ChicagoMercantile Exchange, the New York Mercantile Exchange, the New YorkCommodity Exchange and New York Coffee, sugar and cocoa Exchange.Worldwide there are major futures trading exchanges in over twenty countriesincluding Canada, England, India, France, Singapore, Japan, Australia and NewZealand.
India and the commodity market History of Commodity Market in India:- The history of organized commodity derivatives in India goes back tothe nineteenth century when Cotton Trade Association started futures trading in1875, about a decade after they started in Chicago. Over the time dativesmarket developed in several commodities in India. Following Cotton, derivativestrading 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 unnecessaryspeculation and were detrimental to the healthy functioning of the market forthe underlying commodities, resulting in to banning of commodity optionstrading and cash settlement of commodities futures after independence in 1952.The parliament passed the Forward Contracts (Regulation) Act, 1952, whichregulated contracts in Commodities all over the India. The act prohibited optionstrading in Goods along with cash settlement of forward trades, rendering acrushing blow to the commodity derivatives market. Under the act only thoseassociations/exchanges, which are granted reorganization from the Government,are allowed to organize forward trading in regulated commodities. The actenvisages three tire regulations: (i) Exchange which organizes forward trading incommodities can regulate trading on day-to-day basis; (ii) Forward MarketsCommission provides regulatory oversight under the powers delegated to it bythe central Government. (iii) The Central Government- Department of ConsumerAffairs, Ministry of Consumer Affairs, Food and Public Distribution- is theultimate regulatory authority. The commodities future market remained dismantled andremained dormant for about four decades until the new millennium when theGovernment, in a complete change in a policy, started actively encouragingcommodity market. After Liberalization and Globalization in 1990, theGovernment set up a committee (1993) to examine the role of futures trading.The Committee (headed by Prof. K.N. Kabra) recommended allowing futurestrading in 17 commodity groups. It also recommended strengthening ForwardMarkets Commission, and certain amendments to Forward Contracts(Regulation) Act 1952, particularly allowing option trading in goods andregistration of brokers with Forward Markets Commission. The Governmentaccepted most of these recommendations and futures’ trading was permitted inall recommended commodities. It is timely decision since internationally thecommodity cycle is on upswing and the next decade being touched as thedecade of Commodities.
Commodity exchange in India plays an important role where the prices of anycommodity are not fixed, in an organized way. Earlier only the buyer of produceand its seller in the market judged upon the prices. Others never had a say. Today, commodity exchanges are purely speculative in nature. Beforediscovering the price, they reach to the producers, end-users, and even theretail investors, at a grassroots level. It brings a price transparency and riskmanagement in the vital market. A big difference between a typical auction,where a single auctioneer announces the bids and the Exchange is that peopleare not only competing to buy but also to sell. By Exchange rules and by law, noone can bid under a higher bid, and no one can offer to sell higher than someoneelse’s lower offer. That keeps the market as efficient as possible, and keeps thetraders on their toes to make sure no one gets the purchase or sale before theydo. Since 2002, the commodities future market in India has experienced anunexpected boom in terms of modern exchanges, number of commoditiesallowed for derivatives trading as well as the value of futures trading incommodities, which crossed $ 1 trillion mark in 2006. Since 1952 till 2002commodity datives market was virtually non- existent, except some negligibleactivities on OTC basis. In India there are 25 recognized future exchanges, of which thereare three national level multi-commodity exchanges. After a gap of almost threedecades, Government of India has allowed forward transactions in commoditiesthrough Online Commodity Exchanges, a modification of traditional businessknown as Adhat and Vayda Vyapar to facilitate better risk coverage and deliveryof commodities. The three exchanges are: National Commodity & DerivativesExchange Limited (NCDEX) Mumbai, Multi Commodity Exchange of IndiaLimited (MCX) Mumbai and National Multi-Commodity Exchange of India Limited(NMCEIL) Ahmedabad. There are other regional commodity exchanges situatedin different parts of India.
Legal framework for regulating commodity futures in India:- The commodity futures traded in commodity exchanges areregulated by the Government under the Forward Contracts Regulations Act,1952 and the Rules framed there under. The regulator for the commoditiestrading is the Forward Markets Commission, situated at Mumbai, which comesunder the Ministry of Consumer Affairs Food and Public DistributionForward Markets Commission (FMC):- It is statutory institution set up in 1953 under Forward Contracts(Regulation) Act, 1952. Commission consists of minimum two and maximumfour members appointed by Central Govt. Out of these members there is onenominated chairman. All the exchanges have been set up under overall controlof Forward Market Commission (FMC) of Government of India.National Commodities & Derivatives Exchange Limited (NCDEX) National Commodities & Derivatives Exchange Limited (NCDEX)promoted by ICICI Bank Limited (ICICI Bank), Life Insurance Corporation ofIndia (LIC), National Bank of Agriculture and Rural Development (NABARD) andNational Stock Exchange of India Limited (NSC). Punjab National Bank (PNB),Credit Ratting Information Service of India Limited (CRISIL), Indian FarmersFertilizer Cooperative Limited (IFFCO), Canara Bank and Goldman Sachs bysubscribing to the equity shares have joined the promoters as a share holder ofexchange. NCDEX is the only Commodity Exchange in the country promoted bynational level institutions. NCDEX is a public limited company incorporated on 23 April 2003.NCDEX is a national level technology driven on line Commodity Exchange withan independent Board of Directors and professionals not having any vestedinterest in Commodity Markets.It is committed to provide a world class commodity exchange platform formarket participants to trade in a wide spectrum of commodity derivatives drivenby best global practices, professionalism and transparency. NCDEX is regulated by Forward Markets Commission (FMC).NCDEX is also subjected to the various laws of land like the Companies Act,Stamp Act, Contracts Act, Forward Contracts Regulation Act and various otherlegislations. NCDEX is located in Mumbai and offers facilities to its members inmore than 550 centers through out India. NCDEX currently facilitates trading of57 commodities.
Objectives of Commodity futures:-• Hedging with the objective of transferring risk related to the possession ofphysical assets through any adverse moments in price. Liquidity and Pricediscovery to ensure base minimum volume in trading of a commodity throughmarket information and demand supply factors that facilitates a regular andauthentic price discovery mechanism.• Maintaining buffer stock and better allocation of resources as it augmentsreduction in inventory requirement and thus the exposure to risks related withprice fluctuation declines. Resources can thus be diversified for investments.• Price stabilization along with balancing demand and supply position. Futurestrading leads to predictability in assessing the domestic prices, which maintainsstability, thus safeguarding against any short term adverse price movements.Liquidity in Contracts of the commodities traded also ensures in maintaining theequilibrium between demand and supply.• Flexibility, certainty and transparency in purchasing commodities facilitatebank financing. Predictability in prices of commodity would lead to stability,which in turn would eliminate the risks associated with running the business oftrading commodities. This would make funding easier and less stringent forbanks to commodity market players