Indian markets have recently opened commodity derivatives, allowing retail investors to participate in commodity trading. Commodities such as copper, corn, and crude oil are traded on regulated exchanges like NCDEX, MCX, and NMCE. There are two main markets - the spot market where physical commodities are bought and sold for cash, and the futures market where contracts are made to buy/sell commodities at a future date and price. Exchanges have circuit filters of up to 6% to prevent large price fluctuations. Commodity derivatives provide exposure through futures, exchange traded funds, stocks of commodity companies, and mutual funds.

2. Indian markets have recently thrown
open a new avenue for retail investors and
traders to participate: commodity
derivatives.

3. A commodity may be defined as an
article, a product or material that is brought
and sold.
Example: Copper, Corn , Crude oil etc.,

4. Raw commodities are traded on
regulated commodity exchanges.
It is similar to an equity market.

5. NCDEX- National Commodity and
Derivative Exchange
MCX- Multi Commodity Exchange
NMCE- National Multi Commodity
Exchange of India Limited

6. The Basic Market Structure And Mechanism
Of The Market is:
Spot Market
Market where commodities are bought and sold in
physical form by paying cash is a spot market. The price
on which commodities are traded in this market is called
spot price.
This market can also be called as Physical Market/ Cash
Market

7. The Basic Market Structure and Mechanism
of The Market is:
Spot Market
Futures Market
The market where the commodities are bought and sold
by entering into a contract to settle the transaction at
some future date and at a specific price is called futures
market.

8. The exchanges have circuit filters in
place. The filters vary from commodity to
commodity but the maximum individual
commodity circuit filter is 6%. The price of
any commodity that fluctuates either way
beyond its limit will immediately call for
circuit breaker.

9. Ministry of Consumer
Affairs
Forward Market Commission
Commodity Exchanges
National Exchanges
NCDE
MCX
NMCE
Regional Exchanges

10.  Exchange has a common platform for all
traders where as in bilateral restricted access.
 Price transparency where as traded prices
are unknown to other players.
 Absence of counter party risk where as
presence of counter party risk(credit risk)
 Market prices are available to wider world
where as difficulty in price discrimination

11. Commodity Futures
A standardised agreement to buy/sell
an asset in the future, at a price agreed
today.
Commodity Exchange Traded Funds
Commodity Stock
Commodity Mutual Funds

12. Commodity Futures
Commodity Exchange Traded Funds
(ETFs)
Commodity exchange traded funds
generally are index funds and track
commodity index.
Commodity Stock
Commodity Mutual Funds

13. Commodity Futures
Commodity Exchange Traded Funds
Commodity Stock
Stocks which belong to commodity
related sectors like metals, energy,
agriculture etc.,
Commodity Mutual Funds

14. Commodity Futures
Commodity Exchange Traded Funds
Commodity Stock
Commodity Mutual Funds
Mutual Funds which invest in stocks
belonging to commodity sectors or fund of
funds which invest in other commodity
funds etc.,

15. Commodity Futures
Commodity Exchange Traded Funds
Commodity Stock
Commodity Mutual Funds

16. Lack of storage Facilities
Existence of legal contract
Need of standard of grading
Differing methods of payments
Need of market information
To guarantee the contract

17. Precious Metal
 Gold, Silver, Platinum
Other Metals
 Nickel, Aluminium, Copper, Zinc etc.,
Agro-based Commodities
 Wheat, corn, Cotton, Oil, Oil seeds
Soft Commodities
 Coffee, Cocoa, Sugar, etc.,
Petrochemicals
 Crude oil, Natural gas, Gasoline.

18.  Hedgers
 Farmers
 Manufacturers
 Importers
 exporters
 Speculators
 Brokerage Houses
 Spot Commodity Traders
 Arbitrageurs
 Brokerages Houses
 Investors

19. Market is Expandable
Government control
Commodities can be graded
Involvement of traders

20. Thank You