Commodity Derivative Market: Futures trading of a commodity does not affect its price in the open market


New Delhi: In a recent report, it has been told that there is no strong evidence that commodity prices have increased due to derivatives trading. Along with this, no evidence has been found of any reduction in prices due to the ban on derivative trading of any commodity. This report has been presented after the study of a group of academicians. For a long time, there have been allegations that due to commodity trading, there are fluctuations in the prices of many jeans and commodities in the country, due to which the common people have to face problems.

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This has also come to the fore in a study by the Investor Protection Fund of commodity exchange NCDEX. In a research done on two commodities, it was told that even when the futures trading was banned in the commodity, their price did not decrease in the market. was not done.

NCDEX has done this study on commodities like mustard oil and gram. Tirtha Chatterjee of Udaipur-based Professor Nidhi Agarwal Jindal School of Government and Public Policy and another research scholar participated in this study. It has been found in this study that futures trading is not the reason for the volatility in the price of the commodity. The commodity in which derivatives trading is done, there is not much fluctuation in its price in the market.

It has been said in this report that the commodity traded in the derivatives segment can register more volatility in its price, but the increase or decrease in the price is not related to derivatives trading.

In commodity derivatives trading, things like position limits, margin requirements and daily price caps are applicable. In the study done on mustard oil, it was seen that even after banning derivatives trading, there was no weakness in the price of mustard oil in the open market.

Similarly, even after allowing derivatives trading, there was no increase in the price of mustard oil. It has been shown in this analysis that due to allowing or banning derivatives trading in the price of mustard oil, there has not been much volatility in its price.

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