An official of Ministry of Consumer Affairs, which controls the FMC, claims futures trading performs two important funct
ions: of price discovery and price risk management with reference to the given commodity. It is useful to all segments of the economy – to the farmer because he can get an idea of the price his produce can fetch him after some time; to the consumer since he gets alerted about future prices of essential commodities; and yes, also to exporters as it provides an advance indication of the likely price. Commodity markets were supposed to have eliminated the risk of being duped by a wholesale trader. However, the problem crops up when speculators are allowed to go wild with futures trading without any effective regulation from a body or an institution. The commodities market regulator FMC simply doesn’t have the manpower, the resources and the expertise to effectively regulate the rapidly growing speculation in scores of commodities across India.
For Complete IIPM - Article, Click on IIPM-Editorial Link
Source:- IIPM-Business and Economy,
Initiative:- Prof. Arindam Chaudhuri
ions: of price discovery and price risk management with reference to the given commodity. It is useful to all segments of the economy – to the farmer because he can get an idea of the price his produce can fetch him after some time; to the consumer since he gets alerted about future prices of essential commodities; and yes, also to exporters as it provides an advance indication of the likely price. Commodity markets were supposed to have eliminated the risk of being duped by a wholesale trader. However, the problem crops up when speculators are allowed to go wild with futures trading without any effective regulation from a body or an institution. The commodities market regulator FMC simply doesn’t have the manpower, the resources and the expertise to effectively regulate the rapidly growing speculation in scores of commodities across India.For Complete IIPM - Article, Click on IIPM-Editorial Link
Source:- IIPM-Business and Economy,
Initiative:- Prof. Arindam Chaudhuri
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