AS

TUDYON
“
COMMODI
TIESTRADI
NG-
INVES
TMENTAND

S
PECUL
ATI
ON”

S
UBMI
TTEDI
NTHEPARTI
ALF
ULF
ILMENTOF
THEREQUI
REMENTOF
“
MAS
TEROFBUS
INES
SADMI
NIS
TRATI
ON”I
N

DEC
LARATI
ON

Ih
ereb
yde
cla
ret
hatt
hep
roj
ectr
epo
rto
n“COMMODI
TIESTRADI
NG-
I
NVES
TMENTANDS
PECUL
ATI a
ON”hsb
eens
ubmi
tte
dun
dert
heg
uid
anc
eofXXXX,
Pr
ofe
sso
r,De
par
tme
nto
fCo
mme
rce
,Vi
vek
ana
ndaS
cho
olo
fPo
stGr
adu
ate
S
tud
ies
,Pa
nja
gut
ta.
 If
urt
herd
ecl
aret
hati
tisa
nor
igi
nalwo
rkd
oneb
ymea
sap
arto
fmy
a
cad
emi
cco
urs
ean
dha
sno
tbe
ens
ubmi
tte
del
sewh
eref
ora
nyd
egr
eeo
r
d
ipl
oma
.Th
eob
ser
vat
ion
san
dco
ncl
usi
onswr
itt
eni
nth
isr
epo
rta
reb
ase
don
t
hed
atac
oll
ect
edb
yme
.

XXXX

AC
KNOWL
EDGEMENT

It
aket
hiso
ppo
rtu
nit
ytot
han
kal
lth
osewh
oha
veb
eeno
fhe
lpt
omei
nth
e

c
omp
let
iono
fth
isp
roj
ect
.

Iwo
uldl
ik
etoa
ppr
eci
atet
heg
uid
anc
ean
dco
-op
era
tio
npr
ovi
dedt
omeb
you
r

p
roj
ectg
uid
eXXXX(
fac
ult
yofBu
sin
essMa
nag
eme
nt)
int
hec
omp
let
iono
fth
is
p
roj
ect
.

Ia
mal
sog
rat
efu
ltoXXX,
Dir
ect
orXXXa
nda
llt
hef
acu
ltyme
mbe
rswh
oha
ve

d
ire
ctl
yori
ndi
rec
tlyh
elp
edmei
npr
epa
rin
gth
isp
roj
ectr
epo
rt.

C
ONTENTS

C
HAPTERS PAGENO:

I I
NTRODUC
TION 5
-15

I
I I
NDUS
TRYPROF
ILE 1
6-1
7

I
II NEEDF
ORTHES
TUDY
OBJEC
TIVES
,METHODOL
OGY&L
IMI
TATI
ONS 1
8-1
9

I
V C
OMMODI
TYF
UTURESC
ONTRAC
T 2
0-2
6
V C
OMMODI
TYTRADI
NG 2
7-43

VI PARTI
CIPANTSI
NCOMMODI
TYMARK
ET 44-
48

VI
I REGUL
ATORYF
RAMEWORKF
OR 49
-71
C
OMMODI
TYTRADI
NGI
NINDI
A

VI
II ANAL
YSI
S 7
2-7
7

X C
ONC
LUS
IONS&REC
OMMENDATI
ONS 7
8-7
9

XI BI
BLI
OGRAPHY 8
0

I
NTRODUC
TION

I
ndi
anma
rke
tsh
aver
ece
ntl
yth
rowno
penan
ewa
ven
uef
orr
eta
ili
nve
sto
rsa
nd
t
rad
erst
opa
rti
ci
pat
eco
mmo
dit
yde
riv
ati
ves
.Fo
rth
osewh
owa
ntt
odi
ver
sif
yth
eir
p
ort
fol
io
sbe
yon
dsh
are
s,b
ond
san
dre
ale
sta
te,
commo
dit
iesa
ret
heb
esto
pti
on.

Ti
lls
omemo
nth
sag
o,t
hiswo
uld
n’th
avema
des
ens
e.F
orr
eta
ili
nve
sto
rsc
oul
dha
ve
d
onev
eryl
it
tlet
oac
tua
ll
yin
ves
tinc
ommo
dit
iess
ucha
sgo
lda
nds
il
vero
roi
ls
eed
sint
he
f
utu
resma
rke
t.Th
iswa
sne
arl
yimp
oss
ibl
einc
ommo
dit
iese
xce
ptf
org
olda
nds
il
vera
s
t
her
ewa
spr
act
ica
ll
ynor
eta
ila
ven
uef
orp
ump
ingi
nco
mmo
dit
ies
.

Ho
wev
er,wi
tht
hes
ett
ingu
poft
hre
emu
lti
-c
ommo
dit
yexc
han
gesi
nth
eco
unt
ry,
r
eta
ili
nve
sto
rsc
ann
owt
rad
einc
ommo
dit
yfu
tur
eswi
tho
uth
avi
ngp
hys
ica
lst
ock
s.
 C
ommo
dit
iesa
ctu
all
yof
feri
mme
nsep
ote
nti
alt
obe
comeas
epa
rat
eas
setc
las
sfo
r
ma
rke
t-s
avv
yin
ves
tor
s,a
rbi
tra
geu
rsa
nds
pec
ula
tor
s. Re
tai
lin
ves
tor
s,wh
ocl
aimt
o
u
nde
rst
andt
hee
qui
tyma
rke
ts,ma
yfi
ndc
ommo
dit
iesa
nun
fat
homa
blema
rke
t. Bu
t
c
ommo
dit
iesa
ree
asyt
oun
der
sta
nda
sfa
rasf
und
ame
nta
lso
fde
man
dan
dsu
ppl
yar
e
c
onc
ern
ed.Re
tai
lsh
oul
dun
der
sta
ndt
her
iska
dva
nta
geso
ftr
adi
ngi
nco
mmo
dit
iesf
utu
res
b
efo
ret
aki
ngal
eap
.Hi
sto
ric
all
y,p
ric
ingi
nco
mmo
dit
iesf
utu
resh
asb
eenl
essv
ola
til
e
c
omp
are
dwi
the
qui
tya
ndb
ond
s,t
husp
rov
idi
nga
nef
fic
ien
tpo
rtf
oli
odi
ver
sif
ica
tio
nop
tio
n.

I
nfa
ct,
thes
izeo
fth
eco
mmo
dit
iesma
rke
tsi
nIn
diai
sal
soq
uit
esi
gni
fic
ant
.Oft
he
c
oun
try
’sGDPo
fRs
.1
3,
20,
730c
ror
e(Rs
.1
3,
207
.3b
il
li
on)
,co
mmo
dit
iesr
ela
ted
(
andd
epe
nde
nt)
ind
ust
rie
sco
nst
itu
tea
bou
t58p
erc
ent
.

C
urr
ent
ly,t
hev
ari
ousc
ommo
dit
iesa
cro
sst
hec
oun
tryc
loc
kana
nnu
alt
urn
ove
rof
Rs
.1
,40
,00
0cr
ore(Rs
.1
,40
0bi
ll
io
n).Wi
tht
hei
ntr
odu
cti
ono
ffu
tur
est
rad
ing
,th
esi
zeso
f
t
hec
ommo
dit
iesma
rke
tgr
owma
nyf
old
she
reo
n.
 DEF
INI
TIONOFC
OMMODI
TIES

An
ypr
odu
ctt
hatc
anb
eus
edf
orc
omme
rceo
rana
rti
cl
eofc
omme
rcewh
ichi
str
ade
d
o
nana
uth
ori
zedc
ommo
dit
yexc
han
gei
skn
owna
sco
mmo
dit
y.Th
ear
tic
les
hou
ldb
emo
vab
le
o
fva
lue
,so
met
hin
gwh
ichi
sbo
ugh
tors
olda
ndwh
ichi
spr
odu
cedo
rus
eda
sth
esu
bje
cto
r
b
art
ero
rsa
le.I
nsh
ortc
ommo
dit
yin
clu
desa
llk
ind
sofg
ood
s.F
orwa
rdC
ont
rac
ts(
Reg
ula
tio
n)
Ac
t(F
CRA)
,19
52d
efi
nes“
goo
ds”a
s“e
ver
yki
ndo
fmo
vab
lep
rop
ert
yot
hert
hana
cti
ona
ble
c
lai
ms,
mon
eya
nds
ecu
rit
ies
”.

I
ncu
rre
nts
itu
ati
on,a
llg
ood
san
dpr
odu
ctso
fag
ric
ult
ura
l(i
ncl
udi
ngp
lan
tat
ion
),
mi
ner
ala
ndf
oss
ilo
rig
ina
rea
ll
owe
dfo
rco
mmo
dit
ytr
adi
ngr
eco
gni
zedu
nde
rth
eFC
RA.Th
e
n
ati
ona
lco
mmo
dit
yexc
han
ges
,re
cog
niz
edb
yth
eCe
ntr
alGo
ver
nme
nt,
per
mit
sco
mmo
dit
ies
wh
ichi
ncl
udep
rec
iou
s(g
olda
nds
il
ver
)an
dno
n-f
err
ousme
tal
s:c
ere
alsa
ndp
uls
es;
gin
neda
nd
u
n-g
inn
edc
ott
on;
oil
see
ds,
oil
san
doi
lc
ake
s;r
awj
utea
ndj
uteg
ood
s;s
uga
ran
dgu
r;p
ota
toe
s
a
ndo
nio
ns;
cof
feea
ndt
ea;
rub
bera
nds
pic
es.
Etc
.

I
nth
ewo
rldo
fbu
sin
ess
,ac
ommo
dit
yisa
nun
dif
fer
ent
iat
edp
rod
uctwh
osema
rke
t
v
alu
ear
ise
sfr
omt
heo
wne
r’sr
igh
ttos
ellr
ath
ert
hant
ous
e.Exa
mpl
eco
mmo
dit
iesf
rom
t
hef
ina
nci
alwo
rldi
ncl
udeo
il(
sol
dbyt
heb
arr
el)
,wh
eat
,bu
lkc
hemi
cal
ssu
cha
ssu
lfu
rica
cid
a
nde
venp
orkb
ell
ies
.

NEEDOFC
OMMODI
TYMARK
ETI
NINDI
A

Ac
hie
vin
ghe
dgi
nge
ffi
ci
enc
yist
hema
inr
eas
ont
oop
tfo
rfu
tur
esc
ont
rac
ts.F
or

i
nst
anc
e,i
nFe
bru
ary
,20
07,
Ind
iah
adt
opa
y$5
2pe
rba
rre
lmo
ref
ori
mpo
rti
ngo
ilt
hanwh
at

t
heyh
adt
opa
yawe
eka
go.Th
eut
il
it
yofaf
utu
resc
ont
actf
orh
edg
ingo
rri
skma
nag
eme
nt

p
res
upp
ose
spa
ral
le
lorn
ear
-pa
ral
le
lre
lat
ion
shi
pbe
twe
ent
hes
pota
ndf
utu
resp
ric
eso
ver

t
ime
.Ino
the
rwo
rds
,th
eef
fic
ien
cyo
faf
utu
resc
ont
rac
tfo
rhe
dgi
nge
sse
nti
all
yen
vis
age
s

t
hatt
hep
ric
esi
nth
eph
ysi
cal
andf
utu
resma
rke
tsmo
vei
ncl
oseu
nis
onn
oto
nlyi
nth
esa
me

d
ire
cti
on,
buta
lsob
yal
mos
tth
esa
mema
gni
tud
e,s
oth
atl
oss
esi
non
ema
rke
tar
eof
fse
tby

g
ain
sint
heo
the
r.

Ofc
our
se,
suc
hap
ric
ere
lat
ion
shi
pbe
twe
ent
hes
pota
ndf
utu
resma
rke
tsi
ssu
bje
ct

t
oth
eamo
unto
fca
rry
ingo
rst
ora
gec
ost
sti
llt
hema
tur
itymo
ntho
fth
efu
tur
esc
ont
rac
t.

Th
eor
eti
cal
ly(a
ndi
dea
ll
y)
,inap
erf
ect
lyc
omp
eti
tiv
ema
rke
twi
ths
urp
luss
upp
lie
san
d

a
bun
dan
tst
ock
sro
undt
hey
ear
,th
efu
tur
esp
ric
ewi
lle
xce
edt
hes
potp
ric
ebyt
hec
osto
f

s
tor
aget
il
lth
ema
tur
ityo
fth
efu
tur
esc
ont
rac
t.Bu
tsu
chs
tor
agec
ostd
ecl
in
esa
sth
e
c
ont
rac
tap
pro
ach
esma
tur
ity
,th
ere
byr
edu
cin
gth
epr
emi
umo
rco
nta
ngoc
omma
nde
dbyt
he

f
utu
resc
ont
rac
tov
ert
hes
potd
eli
ver
yov
eri
tsl
ifea
nde
ven
tua
ll
ybe
come
sze
rod
uri
ngt
he

d
eli
ver
ymo
nthwh
ent
hes
pota
ndf
utu
resp
ric
esv
irt
ual
lyc
onv
erg
e.Th
eef
fic
ien
cyo
fa

f
utu
resc
ont
rac
tfo
rhe
dgi
ngd
epe
ndso
nth
epr
eva
len
ceo
fsu
cha
nid
ealp
ric
ere
lat
ion
shi
p

b
etwe
ent
hes
pota
ndf
utu
resma
rke
ts.

C
OMMODI
TIESEXC
HANGES

Ab
rie
fde
scr
ipt
iono
fco
mmo
dit
yexc
han
gesa
ret
hos
ewh
icht
rad
einp
art
icu
lar

c
ommo
dit
ies
,ne
gle
cti
ngt
het
rad
eofs
ecu
rit
ies
,st
ocki
nde
xfu
tur
esa
ndo
pti
onse
tc.
,

th
I
nth
emi
ddl
eof1
9 ce
ntu
ryi
nth
eUn
ite
dSt
ate
s,b
usi
nes
sme
nbe
gano
rga
niz
ing

ma
rke
tfo
rumst
oma
ket
heb
uyi
nga
nds
ell
in
gofc
ommo
dit
iese
asi
er.Th
esec
ent
ralma
rke
t

p
lac
esp
rov
ide
dap
lac
efo
rbu
yer
san
dse
ll
erst
ome
et,
setq
ual
it
yan
dqu
ant
itys
tan
dar
ds,

a
nde
sta
bli
shr
ule
sofb
usi
nes
s.Ag
ric
ult
ura
lco
mmo
dit
ieswe
remo
stl
ytr
ade
dbu
tasl
onga
s

t
her
ear
ebu
yer
san
dse
ll
ers
,an
yco
mmo
dit
yca
nbet
rad
ed.

Th
ema
jorc
ommo
dit
yma
rke
tsa
rei
nth
eUn
ite
dKi
ngd
oma
ndi
nth
eUS
A.I
nIn
dia

t
her
ear
e25r
eco
gni
zedf
utu
ree
xch
ang
es,o
fwh
icht
her
ear
eth
reen
ati
ona
lle
velmu
lti
-

c
ommo
dit
yexc
han
ges
.Af
terag
apo
fal
mos
tth
reed
eca
des
,Go
ver
nme
nto
fIn
diah
as

a
ll
owe
dfo
rwa
rdt
ran
sac
tio
nsi
nco
mmo
dit
iest
hro
ughOn
li
neC
ommo
dit
yExc
han
ges
,a

mo
dif
ica
tio
noft
rad
iti
ona
lbu
sin
essk
nowna
sAd
hata
ndVa
ydaVy
apa
rtof
aci
li
tat
ebe
tte
r

r
iskc
ove
rag
ean
dde
liv
eryo
fco
mmo
dit
ies
.

THETHREEEXC
HANGESARE

 Na
tio
nal
Commo
dit
y&De
riv
ati
vesExc
han
geL
imi
ted(
NCDEX)
 Mu
lti
Commo
dit
yExc
han
geo
fIn
diaL
imi
ted(
MCX)

 Na
tio
nal
Mul
ti
-Co
mmo
dit
yExc
han
geo
fIn
diaL
imi
ted(
NMC
EIL
)

Al
lth
eexc
han
gesh
aveb
eens
etu
pun
dero
ver
all
con
tro
lofF
orwa
rdMa
rke
tCo
mmi
ssi
on(
FMC
)

o
fGo
ver
nme
nto
fIn
dia
.

Na
tio
nal
Commo
dit
y&De
riv
ati
vesExc
han
gesL
imi
ted(
NCDEX)

Na
tio
nal
Commo
dit
y&De
riv
ati
vesExc
han
gesL
imi
ted(
NCDEX)
loc
ate
dinMu
mba
iisa

p
ubl
icl
imi
tedc
omp
anyi
nco
rpo
rat
edo
nAp
ril
23,
200
3un
dert
heC
omp
ani
esAc
t,1
956a
ndh
ad

c
omme
nce
dit
sop
era
tio
nso
nDe
cemb
er1
5,2
003
.Th
isi
sth
eon
lyc
ommo
dit
yexc
han
gei
nth
e

c
oun
tryp
romo
tedb
yna
tio
nall
eve
lin
sti
tut
ion
s.I
tisp
romo
tedb
yIC
ICIBa
nkL
imi
ted
,Li
fe

I
nsu
ran
ceC
orp
ora
tio
nan
dNa
tio
nalBa
nkf
orAg
ric
ult
urea
ndRu
ralDe
vel
opme
nt(
NABARD)

a
ndNa
tio
nalS
toc
kExc
han
geo
fIn
diaL
imi
ted(
NSE)
.Iti
sap
rof
ess
ion
all
yma
nag
edo
nli
ne

mu
ltic
ommo
dit
yexc
han
ge.NC
DEXi
sre
gul
ate
dbyF
orwa
rdMa
rke
tCo
mmi
ssi
ona
ndi
s

s
ubj
ect
edt
ova
rio
usl
awso
fth
ela
ndl
ik
eth
eCo
mpa
nie
sAc
t,S
tampAc
t,C
ont
rac
tsAc
t.
,

F
orwa
rdC
ommi
ssi
on(
Reg
ula
tio
n)Ac
tan
d*v
ari
ouso
the
rle
gis
lat
ion
s.

Mu
lti
Commo
dit
yExc
han
geo
fIn
diaL
imi
ted(
MCX)

He
adq
uar
ter
edi
nMu
mba
iMu
ltiC
ommo
dit
yExc
han
geo
fIn
diaL
imi
ted(
MCX)
,isa
n

i
nde
pen
den
tan
dde
-mu
tua
lis
ede
xch
ang
ewi
thap
erma
nen
tre
cog
nit
ionf
romGo
ver
nme
nto
f

I
ndi
a.K
eys
har
eho
lde
rso
fMC
Xar
eFi
nan
cia
lTe
chn
olo
gie
s(I
ndi
a)L
td.
,St
ateBa
nko
fIn
dia
,

Un
ionBa
nko
fIn
dia
,Co
rpo
rat
ionBa
nk,
Ban
kofI
ndi
aan
dCa
nar
aBa
nk.MC
Xfa
cil
it
ate
son
li
ne

t
rad
ing
,cl
ear
inga
nds
ett
leme
nt.

Al
lth
eexc
han
gesh
aveb
eens
etu
pun
dero
ver
allc
ont
rolo
fFo
rwa
rdMa
rke
t
C
ommi
ssi
on(
FMC
)ofGo
ver
nme
nto
fIn
dia
.

C
ommo
dit
yexc
han
gei
nIn
diap
lay
sani
mpo
rta
ntr
olewh
eret
hep
ric
eso
fan
y

c
ommo
dit
yar
eno
tfi
xed
,ina
nor
gan
ize
dwa
y.Ea
rli
ero
nlyt
heb
uye
rofp
rod
ucea
ndi
ts

s
ell
eri
nth
ema
rke
tju
dge
dup
ont
hep
ric
es.Ot
her
sne
verh
adas
ay.To
day
,co
mmo
dit
y

e
xch
ang
esa
rep
ure
lys
pec
ula
tiv
einn
atu
re.Be
for
edi
sco
ver
ingt
hep
ric
e,t
heyr
eac
htot
he

p
rod
uce
rs,
end
-us
ers
,an
dev
ent
her
eta
ili
nve
sto
rs,
atag
ras
sro
otsl
eve
l.I
tbr
ing
sap
ric
e

t
ran
spa
ren
cya
ndr
iskma
nag
eme
nti
nth
evi
tal
mar
ket
.

Ab
igd
iff
ere
nceb
etwe
enat
ypi
cal
auc
tio
n,wh
ereas
ing
lea
uct
ion
eera
nno
unc
est
he

b
ids
,an
dth
eExc
han
gei
sth
atp
eop
lea
ren
oto
nlyc
omp
eti
ngt
obu
ybu
tal
sot
ose
ll
.By

Exc
han
ger
ule
san
dbyl
aw,n
oon
eca
nbi
dun
derah
igh
erb
id,a
ndn
oon
eca
nof
fert
ose
ll

h
igh
ert
hans
omeo
nee
lse
’sl
owe
rof
fer
.Th
atk
eep
sth
ema
rke
tase
ffi
ci
enta
spo
ssi
bl
e,a
nd

k
eep
sth
etr
ade
rso
nth
eirt
oest
oma
kes
uren
oon
ege
tst
hep
urc
has
eors
aleb
efo
ret
heyd
o.

Na
tio
nal
Boa
rdo
fTr
ade

Mu
lti
Commo
dit
yExc
han
geo
fIn
dia

Na
tio
nal
Commo
dit
y&De
riv
ati
vesExc
han
geso
fIn
diaL
td.
,

C
ommo
dit
yExc
han
ge Pr
odu
cts
Na
tio
nal
boa
rdo
ftr
ade
,In
dor
e S
oya
,mu
sta
rd
Na
tio
nal
mul
tic
ommo
dit
yexc
han
ge,
Ahme
dab
ad Mu
lti
ple
Ah
med
aba
dco
mmo
dit
yexc
han
ge C
ast
or,
cot
ton
Ra
jad
han
iOi
l&Oi
lse
eds Mu
sta
rd
Vi
jai
Beo
parC
hamb
erL
td.
,Mu
zza
ffa
rna
gar Gu
r
Ra
jko
tse
eds
,Oi
l&b
ull
io
nexc
han
ge C
ast
or,
gro
und
nut
I
PSTA,
Coc
hin Pe
ppe
r
C
hamb
ero
fco
mme
rce
,Ha
pur Gu
r,mu
sta
rd
Bh
ati
ndaOma
ndOi
lExc
han
ge Gu
r
Ot
her(
mos
tlyi
nac
tiv
e)

C
ommo
dit
yExc
han
gesRe
gis
ter
edi
nIn
dia
C
ommo
dit
yExc
han
ge Pr
odu
ctsTr
ade
d
Bh
ati
ndaOm&Oi
lExc
han
geL
td.
, Gu
r
S
unf
lowe
rOi
l
C
ott
on(
See
dan
dOi
l)
S
aff
lowe
r(S
eed,
Oil
andOi
lCa
ke)
Th
eBo
mba
yco
mmo
dit
yExc
han
geL
td Gr
oun
dnu
t(Nu
tan
dOi
l)
C
ast
orOi
l,
Cas
tors
eed
S
esa
mum(
Oil
andOi
lc
ake
)
Ri
ceb
ran
,ri
ceb
rano
ila
ndo
ilc
ake
C
rud
epa
lmo
il
Th
e Ra
jko
tSe
eds Oi
l & Bu
ll
io
n Me
rch
ant
s Gr
oun
dnu
tOi
l,
Cas
troS
eed
As
soc
iat
ionL
td.
Th
eKa
npu
rCo
mmo
dit
yExc
han
geL
td.
, Ra
pes
eed/Mu
sta
rds
eedo
ila
ndc
ake
.
TeMe
eer
utAg
roc
ommo
dit
iesExc
han
geC
o.,
Ltd
. Gu
r
Th
eSp
ice
san
dOi
ls
eed
sexc
han
geL
td.
,Sa
ngl
i Tu
rme
ric
Ah
med
aba
dCo
mmo
dit
iesExc
han
geL
td C
ott
ons
eed
,ca
sto
rse
ed
Vi
jayBe
opa
rCh
amb
erL
td.
,Mu
zaf
far
nag
r Gu
r
I
ndi
aPe
ppe
r&S
pic
eTr
adeAs
soc
iat
ion
,Ko
chi Pe
ppe
r
Ra
jad
han
iOi
lsa
ndOi
lse
edsExc
han
geL
td.
,
Del
hi Gu
r,Ra
pes
eed/Mu
sta
rdS
eedS
uga
r
 Gr
ade–M
Ra
pes
eed/Mu
sta
rdS
eed/Oi
l/C
ake
S
oyab
ean/Me
al/Oi
l/C
rud
ePa
lmOi
l
Na
tio
nal
Boa
rdo
fTr
ade
,In
dor
e

Th
eCh
amb
ero
fCo
mme
rce
,Ha
pur Gu
r,Ra
pes
eed/Mu
sta
rds
eed
Th
eEa
stI
ndi
aCo
tto
nAs
soc
iat
ion
,Mu
mba
i C
ott
on
Th
ece
ntr
alI
ndi
aCo
mme
rci
alExc
han
geL
tdGwa
lia
r Gu
r
Th
eea
stI
ndi
aJu
te& He
ssa
inExc
han
geL
td.
, He
ssa
in,
Sac
kin
g
K
olk
ata
F
irs
tCo
mmo
dit
yExc
han
geo
fIn
diaL
td.
,K
och
i C
opr
a,C
oco
nutOi
l&C
opr
aCa
ke
Th
eCo
ffe
eFu
tur
esExc
han
geI
ndi
aLt
dBa
nga
lor
e C
off
ee
Gu
rRBDPa
mol
ien
C
rud
ePa
lmOi
l,
Cop
ra
Ra
pes
eed/Mu
sta
rdS
eed
,So
yBe
an
C
ott
on(
See
d,Oi
l,
Oil
Cak
e)
Na
tio
nal
Mul
tiC
ommo
dit
yExc
han
geo
fIn
diaL
td.
,/S
aff
lowe
r(S
eed
,Oi
l,
andOi
lca
ke)
Ah
med
aba
d Gr
oun
dnu
t(S
eed
,Oi
l,
andOi
lca
ke)
S
uga
r,S
ack
ing
,Gr
am
C
oco
nut(
Oil
andOi
lc
ake
)
C
ast
or(
Oil
andOi
lc
ake
)
S
esa
mum(
See
d,Oi
l,
andOi
lca
ke)
L
ins
eed(
See
d,Oi
l,
andOi
lca
ke)
Ri
ce Br
an Oi
l,Pe
ppe
r,Gu
ars
eed
Al
umi
numi
ngo
ts,
Nic
kel
,ti
nVa
nas
pat
i,
Ru
bbe
r,C
opp
er,
Zin
c,L
ead

Na
tio
nalc
ommo
dit
y & De
riv
ati
ves Exc
han
geS
oyBe
an,Re
fin
edS
oyo
il
,Mu
sta
rd
L
imi
ted S
eed
Exp
ell
erMu
sta
rdOi
l
RBDPa
lmo
lei
nCr
udePa
lmOi
l
 Me
diu
mst
apl
eco
tto
n
L
ongS
tap
leC
ott
on
Go
ld,
Sil
ver

C
ashC
ommo
dit
y

Ac
ashc
ommo
dit
ymu
stme
ett
hre
eba
sicc
ond
iti
onst
obes
ucc
ess
ful
lyt
rad
edi
nth
efu
tur
es

ma
rke
t:

1
.Ith
ast
obes
tan
dar
diz
eda
nd,
fora
gri
cul
tur
ala
ndi
ndu
str
ialc
ommo
dit
ies
,mu
stb
eina

b
asi
c,r
aw,u
npr
oce
sse
dst
ate
.Th
erea
ref
utu
resc
ont
rac
tso
nwh
eat
,bu
tno
tonf
lou
r.

Wh
eati
swh
eat(
alt
hou
ghd
iff
ere
ntt
ype
sofwh
eath
aved
iff
ere
ntf
utu
resc
ont
rac
ts)
.Th
e

mi
ll
erwh
one
edswh
eatf
utu
rest
ohe
lph
ima
voi
dlo
sin
gmo
neyo
nhi
sfl
ourt
ran
sac
tio
nswi
th

c
ust
ome
rswo
uld
n’tn
eedf
lou
rfu
tur
es.Ag
ive
namo
unto
fwh
eaty
iel
dsag
ive
namo
unto
f

f
lou
ran
dth
eco
sto
fco
nve
rti
ngwh
eatt
ofl
ouri
sfa
irl
yfi
xedh
enc
epr
edi
cta
ble
.

2
.Pe
ris
hab
lec
ommo
dit
iesmu
sth
avea
nad
equ
ates
hel
fli
fe,
bec
aus
ede
liv
eryo
naf
utu
res

c
ont
rac
tisd
efe
rre
d.

3
.Th
eca
shc
ommo
dit
y’sp
ric
emu
stf
luc
tua
tee
nou
ght
ocr
eat
eun
cer
tai
nty
,wh
ichme
ansb
oth

r
isea
ndp
ote
nti
alp
rof
it.

Un
li
keas
toc
k,wh
ichr
epr
ese
ntse
qui
tyi
nac
omp
anya
ndc
anb
ehe
ldf
ora
lon
gti
me,
ifn
ot

i
nde
fin
ite
ly,f
utu
resc
ont
rac
tsh
avef
ini
tel
iv
es.Th
eya
rep
rima
ril
yus
edf
orh
edg
ing

c
ommo
dit
ypr
ice
-fl
uct
uat
ionr
isk
sorf
ort
aki
nga
dva
nta
geo
fpr
icemo
veme
nts
,ra
the
rth
an

f
ort
heb
uyi
ngo
rse
ll
in
goft
hea
ctu
alc
ashc
ommo
dit
y.Th
ewo
rd“
con
tra
ct”i
sus
edb
eca
usea

f
utu
resc
ont
rac
tre
qui
resd
eli
ver
yoft
hec
ommo
dit
yinas
tat
edmo
nthi
nth
efu
tur
eun
les
s
t
hec
ont
rac
tisl
iq
uid
ate
dbe
for
eite
xpi
res
.

Th
ebu
yero
fth
efu
tur
esc
ont
rac
t(t
hep
art
ywi
thal
ongp
osi
tio
n)a
gre
eso
naf
ixe
d

p
urc
has
epr
icet
obu
yth
eun
der
lyi
ngc
ommo
dit
y(wh
eat
,go
ldo
rT-
bil
ls
,fo
rexa
mpl
e)f
orm

t
hes
ell
era
tth
eexp
ira
tio
noft
hec
ont
rac
t.Th
ese
ll
ero
fth
efu
tur
esc
ont
rac
t(t
hep
art
y

wi
thas
hor
tpo
sit
ion
)ag
ree
stos
ell
theu
nde
rly
ingc
ommo
dit
ytot
heb
uye
rate
xpi
rat
iona
t

t
hef
ixe
dsa
lesp
ric
e.Ast
imep
ass
es,
thec
ont
rac
t’sp
ric
ech
ang
esr
ela
tiv
etot
hef
ixe
d

p
ric
eatwh
icht
het
rad
ewa
sin
iti
ate
d.Th
isc
rea
tesp
rof
itso
rlo
sse
sfo
rth
etr
ade
r.

I
nmo
stc
ase
s,d
eli
ver
yne
vert
ake
spl
ace
.In
ste
ad,b
otht
heb
uye
ran
dth
ese
ll
er,a
cti
ng

i
nde
pen
den
tlyo
fea
cho
the
r,u
sua
ll
yli
qui
dat
eth
eirl
onga
nds
hor
tpo
sit
ion
sbe
for
eth
e

c
ont
rac
texp
ire
s:t
heb
uye
rse
llf
utu
resa
ndt
hes
ell
erb
uysf
utu
res
.

Th
eBr
ett
onWo
odss
yst
emo
ffi
xede
xch
ang
era
tes

Th
ech
ieff
eat
ure
soft
heBr
ett
onWo
odss
yst
emwe
rea
nob
li
gat
ionf
ore
achc
oun
tryt
o

a
dop
tamo
net
aryp
oli
cyt
hatma
int
ain
edt
hee
xch
ang
era
teo
fit
scu
rre
ncywi
thi
naf
ixe
d

v
alu
e-p
luso
rmi
nuso
nep
erc
ent–i
nte
rmso
fgo
ld;a
ndt
hea
bil
it
yoft
heI
MFt
obr
idg
e

t
emp
ora
ryi
mba
lan
ceso
fpa
yme
nts
.

Th
e“p
egg
edr
ate
”or“
parv
alu
e”c
urr
enc
yre
gime

Wh
ate
mer
gedwa
sth
e“p
egg
edr
ate
”cu
rre
ncyr
egi
me.Me
mbe
rswe
rer
equ
ire
dtoe
sta
bli
sh

ap
ari
tyo
fth
eirn
ati
ona
lcu
rre
nci
esi
nte
rmso
fgo
ld(
a“p
eg”
)an
dtoma
int
aine
xch
ang
e

r
ate
swi
thi
npl
uso
rmi
nus1
%ofp
ari
ty(a“
ban
d”)b
yin
ter
ven
ingi
nth
eirf
ore
igne
xch
ang
e

ma
rke
ts(
tha
tis
,bu
yin
gors
ell
in
gfo
rei
gnmo
ney
).
Th
e“r
ese
rvec
urr
enc
y”

I
npr
act
ice
,ho
wev
er,s
inc
eth
epr
inc
ipa
l“Re
ser
vec
urr
enc
y”wo
uldb
eth
eU.
Sdo
ll
ar,t
his

me
antt
hato
the
rco
unt
rie
swo
uldp
ett
hei
rcu
rre
nci
est
oth
eU.
Sdo
ll
ar,a
nd–o
nce

c
onv
ert
ibi
li
tywa
sre
sto
red–wo
uldb
uya
nds
ellU.
Sdo
ll
arst
oke
epma
rke
texc
han
ger
ate
s

wi
thi
npl
uso
rmi
nus1
%ofp
ari
ty.Th
us,
theU.
Sdo
ll
art
ooko
vert
her
olet
hatg
oldh
adp
lay
ed

u
nde
rth
ego
lds
tan
dar
dint
hei
nte
rna
tio
nal
fin
anc
ial
sys
tem.

Me
anwh
il
e,i
nor
dert
obo
lst
erf
ait
hint
hed
oll
ar,t
heU.
Sag
ree
dse
par
ate
lyt
oli
nkt
he

d
oll
art
ogo
lda
tth
era
teo
f$3
5pe
rou
nceo
fgo
ld.
Memb
erc
oun
tri
esc
oul
don
lyc
han
get
hei
r

p
arv
alu
ewi
thI
MFa
ppr
ova
l,wh
ichwa
sco
nti
nge
nto
nIMFd
ete
rmi
nat
iont
hati
tsb
ala
nce
sof

p
ayme
ntswa
sina“
fun
dame
nta
ldi
seq
uil
ib
riu
m”.
 3
.1
INDUS
TRYPROF
ILE

Na
tio
nal
Commo
dit
yan
dDe
riv
ati
vesExc
han
geL
imi
ted(
NCDEX)
isap
rof
ess
ion
all
yma
nag
ed
o
n-l
in
emu
ltic
ommo
dit
yexc
han
gep
romo
tedb
yIC
ICIBa
nkL
imi
ted(
ICI
CIBa
nk)
,Li
fe
I
nsu
ran
ceC
orp
ora
tio
nofI
ndi
a(L
IC)
,Na
tio
nalBa
nkf
orAg
ric
ult
urea
ndr
ura
lDe
vel
opme
nt
(
NABARD)a
ndNa
tio
nalS
toc
kExc
han
geo
fIn
diaL
imi
ted(
NSE)
.Ca
nar
aBa
nk(
PNB)
,CRI
SIL
L
imi
ted(
for
mer
lyt
heC
red
itRa
tin
gIn
for
mat
ionS
erv
ice
sofI
ndi
aLi
mit
ed)
,Go
ldma
nSa
chs
,
I
ndi
anF
arme
rsF
ert
il
is
erC
oop
era
tiv
eLi
mit
ed(
IFF
CO)a
ndPu
nja
bNa
tio
nalBa
nkb
y
s
ubs
cri
bin
gtot
hee
qui
tys
har
esh
avej
oin
edt
hei
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.
NEEDF
ORTHES
TUDY

Th
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mmo
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yisu
nde
rta
kent
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aly
zet
het
rad
ing

Pr
act
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ths
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ncet
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Ma
nag
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niq
ues
.
 OBJEC
TIVES

 Tos
tud
yth
eco
nce
ptso
fco
mmo
dit
iesTr
adi
ngi
nIn
dia
.

 Tos
tud
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eVa
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 ToS
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Ma
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ts

 Tos
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 Toa
nal
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n

I
ndi
anma
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tan
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ora
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ove
men
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her
e

a
fte
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 METHODOL
OGY

Toa
chi
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bje
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b
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ari
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bsi
tes

me
nti
one
dbe
low.

WEBS
ITES
:

www.
wik
ipe
dia
.co
m

www.
i
nve
sto
ped
ia.
co
m

www.
goo
gle
.co
m
 L
IMI
TATI
ONSOFTHES
TUDY

Th
est
udyi
sli
mit
edt
o“C
ommo
dit
yTr
adi
ng–I
nve
stme
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pec
ula
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e

I
ndi
anc
ont
ext
.

1Th
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ann
ots
aya
sto
tal
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erf
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ssu
bje
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dtoa
nya
lte
rat
ion.

2
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ter
nat
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c
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Iti
sli
mit
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ona
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nal
lev
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 5
.1C
OMMODI
TYF
UTURESC
ONTRAC
T

C
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dit
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tur
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f
utu
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ree
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ans
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tte
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e.

Own
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soft
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rly
ingc
ommo
dit
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ichh
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inv
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it.

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liv
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c
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han
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red
eli
ver
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ies
.

DI
STI
NCTI
ONBETWEENF
UTURES&F
ORWARDSC
ONTRAC
TS

F
orwa
rdC
ont
rac
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orwa
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ree
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ree
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ll
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e.

F
eat
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Th
esa
lie
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eat
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soff
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ont
rac
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re:

 Th
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tra
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enc
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ter
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 Ea
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e
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tty
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ual
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 Th
eco
ntr
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ene
ral
lyn
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 Ont
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 I
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rac
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ori
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c
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tan
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asi
nth
eca
se

o
ffo
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xch
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her
ebyr
edu
cin
gtr
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san
din
cre
asi
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ran
sac
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wo
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ter
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ma
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rti
nup
fro
nt.Ho
wev
er,t
hisi
s

g
ene
ral
lyar
ela
tiv
elys
mal
lpr
opo
rti
ono
fth
eva
lueo
fth
eas
set
sun
der
lyi
ngt
hef
orwa
rd

c
ont
actt
heu
seo
ffo
rwa
rdma
rke
tsh
eres
upp
lie
sle
ver
aget
oth
esp
ecu
lat
or.
 L
imi
tat
ion
sofF
orwa
rdMa
rke
ts

F
orwa
rdma
rke
tswo
rld
-wi
dea
rea
ffl
ic
tedb
yse
ver
alp
rob
lems
:

 L
acko
fce
ntr
ali
zat
iont
rad
ing

 I
ll
iq
uid
ity
,an
d

 C
oun
terp
art
yri
sk

I
nth
efi
rstt
woo
fth
ese
,th
eba
sicp
rob
lemi
sth
ato
fto
omu
chf
lexi
bil
it
yan
dge
ner
ali
ty.

Th
efo
rwa
rdma
rke
tisl
ik
ear
eal
est
atema
rke
tint
hata
nyt
woc
ons
ent
inga
dul
tsc
anf
orm

c
ont
rac
tsa
gai
nste
acho
the
r.Th
iso
fte
nma
kest
hemd
esi
gnt
ermso
fde
al,
whi
cha
rev
ery

c
onv
eni
enti
nth
ats
pec
ifi
csi
tua
tio
n,b
utma
kest
hec
ont
rac
tsn
on-
tra
dea
ble
.

C
oun
terp
art
yri
ska
ris
esf
romt
hep
oss
ibi
li
tyo
fde
fau
ltb
yan
yon
epa
rtyt
oth
e

t
ran
sac
tio
n.Wh
eno
neo
fth
etwos
ide
stot
het
ran
sac
tio
nde
cla
resb
ank
rup
tcy
,th
eot
her

s
uff
ers
.Ev
enwh
enf
orwa
rdma
rke
tst
rad
est
and
ard
ize
dco
ntr
act
s,a
ndh
enc
eav
oidt
he

p
rob
lemo
fli
qui
dit
y,s
til
lth
eco
unt
erp
art
yri
skr
ema
insav
erys
eri
ousi
ssu
e.

F
utu
resC
ont
rac
ts:

F
utu
resma
rke
tswe
red
esi
gne
dtos
olv
eth
epr
obl
emst
hate
xiti
nfo
rwa
rdma
rke
ts.A

f
utu
resc
ont
rac
tisa
nag
ree
men
tbe
twe
ent
wop
art
iest
obu
yors
ella
nas
seta
tac
ert
ain

t
imei
nth
efu
tur
eatac
ert
ainp
ric
e.Bu
tun
li
kef
orwa
rdc
ont
rac
ts,
thef
utu
resc
ont
rac
ts

a
res
tan
dar
diz
eda
nde
xch
ang
etr
ade
d.Tof
aci
li
tat
eli
qui
dit
yint
hef
utu
resc
ont
act
s,t
he

e
xch
ang
esp
eci
fie
sce
rta
ins
tan
dar
dfe
atu
reso
fco
ntr
act
.Iti
sas
tan
dar
diz
edc
ont
rac
t

wi
ths
tan
dar
dun
der
lyi
ngi
nst
rume
nt,as
tan
dar
dqu
ant
itya
ndq
ual
it
yofu
nde
rly
ing

i
nst
rume
ntt
hatc
anb
ede
liv
ere
d,(
orwh
ichc
anb
eus
edf
orr
efe
ren
cep
urp
ose
sin
s
ett
leme
nt)a
ndas
tan
dar
dti
min
gofs
uchs
ett
leme
nt.
Afu
tur
esc
ont
rac
tma
ybeo
ffs
et

p
rio
rtoma
tur
ityb
yen
ter
ingi
ntoa
neq
uala
ndo
ppo
sit
etr
ans
act
ion
.Mo
ret
han9
9%o
f

f
utu
rest
ran
sac
tio
nsa
reo
ffs
ett
hiswa
y.

Th
est
and
ard
ize
dit
emsi
naf
utu
resc
ont
rac
tar
e:

 Qu
ant
ityo
fun
der
lyi
ng

 Qu
ali
tyo
fun
der
lyi
ng

 Th
eda
tea
ndmo
ntho
fde
liv
ery

 Th
eun
itso
fpr
iceq
uot
ati
ona
ndmi
ni
mump
ric
ech
ang
e

 L
oca
tio
nofs
ett
leme
nt.

Di
sti
nct
ionb
etwe
enf
utu
resa
ndf
orwa
rdsc
ont
rac
ts

F
UTURES F
ORWARDS

Tr
adeo
nano
rga
niz
ede
xch
ang
e OTCi
nna
tur
e

S
tan
dar
diz
edc
ont
rac
tte
rms C
ust
omi
zedc
ont
rac
tte
rms

He
ncemo
rel
iq
uid He
ncel
essl
iq
uid

Re
qui
resma
rgi
npa
yme
nt Noma
rgi
nha
ppe
nsa
tte
ndso
fpe
rio
d
F
orwa
rdc
ont
rac
tsa
reo
fte
nco
nfu
sedwi
thf
utu
resc
ont
rac
ts.Th
eco
nfu
sio
nisp
rima
ril
y

b
eca
useb
oths
erv
ees
sen
tia
ll
yth
esa
mee
con
omi
cfu
nct
iono
fal
lo
cat
ingr
iski
nth
epr
ese
nce

o
ffu
tur
epr
iceu
nce
rta
int
y.Ho
wev
erf
utu
resa
reas
ign
ifi
can
timp
rov
eme
nto
vert
he

f
orwa
rdc
ont
rac
tsa
sth
eye
limi
nat
eco
unt
erp
art
yri
ska
ndo
ffe
rmo
rel
iq
uid
ity
.

C
OMMODI
TYF
UTURESTERMI
NOL
OGY

Ba
sic
:Th
edi
ffe
ren
ceb
etwe
ent
hec
urr
entc
ashp
ric
ean
dth
efu
tur
epr
iceo
fth
esa
me

c
ommo
dit
yfo
rag
ive
nco
ntr
actmo
nth
.

Be
arMa
rke
t:Ap
eri
odo
fde
cli
ni
ngma
rke
tpr
ice
s.

Bu
llMa
rke
t:Ap
eri
odo
fri
si
ngma
rke
tpr
ice
s.

Br
oke
r:Ac
omp
anyo
rin
div
idu
alt
hate
xec
ute
sfu
tur
esa
ndo
pti
onso
rde
rso
nbe
hal
fof

f
ina
nci
ala
ndc
omme
rci
ali
nst
itu
tio
nsa
ndo
rth
ege
ner
alp
ubl
ic
.