#mcx #futures #Commodity

1. Commodity Market

2.  A reasonably interchangeable good or material, bought and
sold freely as an article of commerce. Commodities include
agricultural products, fuels, and metals and are traded in bulk
on a commodity exchange or spot market.
 A commodity is anything for which there is demand, but
which is supplied without qualitative differentiation across a
markets.

3. • Commodity market is a place where trading of commodities
takes place. These are the markets where raw products are
exchanged.
• These raw commodities are traded on regulated commodity
exchanges, in which they are bought and sold in standardized
contracts. It is similar to an equity market, but instead of
buying or selling shares one buys or sells commodities.

5. 20 Other Regional ExchangesNMCE
Commodity Exchanges
MCX
National
exchanges
Regional
exchanges
FMC
NBOTNCDEX

6. The two most important commodity exchanges in India are;
1) Multi-Commodity Exchange of India Limited (MCX),
2) National Multi-Commodity & Derivatives Exchange of India
Limited (NCDEX)

7.  National Commodity & Derivatives Exchange of India
Limited (NCDEX) is an online commodity exchange. It
commenced its operations on December 15, 2003.
 LIC, NABARD & NSE are Promoter Shareholder.
 NCDEX is regulated by Forward Markets Commission.
 NCDEX currently facilitates trading of 57 commodities,
including :
 Agri-based commodities
 Bullion
 Energy
 Ferrous metals
 Non-ferrous metals
 Plastics

8. MCX . …

9.  National Multi Commodity Exchange of India Limited
(NMCE) is the first de-mutualized, Electronic Multi-
Commodity Exchange in India.
 On 25th July, 2001, it was granted approval by the
Government to organize trading in the edible oil complex.
 It came in to operations from November 26, 2002.
 It is being supported by Central Warehousing Corporation
Ltd., Gujarat State Agricultural Marketing Board and Neptune
Overseas Limited.

10.  When trading commodities we calculate their price moves in
a measurement called Ticks. A tick is therefore the smallest possible price
change for any commodity-based instrument and the size of a tick will be
unique to each instrument in question.
 For example, If a barrel of crude oil is trading at $90.05 and moves to
$90.06, we say ; it is moved by one Tick.

11.  If we buy 100 barrels of crude oil and the price per barrel rises
by $0.01 then our position profits by $1.00 (100 * 0.01).
 If we buy 500 barrels of crude oil that means every time the
price rises by $0.01 we make $5.00

12.  Spot trading is any transaction where delivery either takes
place immediately, or if there is a minimum lag, due to
technical constraints, between the trade and delivery.
Commodities constitute the only spot markets which have
existed nearly throughout the history of humankind.

13.  A Forward Contract or Future is an agreement between two
parties to buy or sell an asset at a certain future time for a
certain price agreed.
 Forward contracts can be customized to accommodate any
commodity, in any quantity, for delivery at any point in the
future, at any place.

14.  Futures are used for hedging, particularly in a bear market.
 Futures are exchange-traded derivatives.
 The particular asset as well as the quantity are specified in the
futures contract.
 The currency in which the contract is to be executed is also
specified in future contracts.
 Future contracts have high liquidity, since buyers and sellers
of futures contracts can be found easily.
 Futures are highly standardized.

15.  Speculator
A trader who enters the futures market in pursuit
of profit, accepting risk in the endeavor.
 Hedger
A Trader who enters the futures market to reduce
some pre-existing risk exposure.
 Broker
An Individual or firm acting as an intermediary
by conveying customers’ trade instructions.
Account executives or floor brokers are examples
of brokers.

18. Thank You