SJMSOM-IIT Bombay
Organizes Talk by Rajeev Aggarwal on Commodity Futures Markettext
The afternoon of January 16th,
2008, saw the students from the Shailesh J. Mehta School of Management
interacting and gaining valuable insights from Mr. Rajeev Aggarwal,
Member, Forward Markets Commission. Mr. Aggarwal gave the students an
insight about the
structure, function, necessity and the history of commodity futures market in
India.text
The students who went in to the
conference room believing it to be just another PPT were in for a pleasant
surprise. The talk covered the entire spectrum of the commodities markets,
drawing parallels with the capital markets, and had the students engrossed for a
good two and half hours.text
As Mr. Aggarwal put it, the
commodities future market in India consists of 24 exchanges including the
national level NCDEX, MCX Exchanges with the FMC at the top of the hierarchy.
These exchanges trade various commodities ranging from agro-products like spices
and fibers to metals, bullion and crude oil. Mr. Aggarwal explained the
functioning of the futures markets and contrasted them with the spot markets or
the 'mandis'. He talked about how the futures markets eliminated the
inefficiencies present in the spot markets and helped in insulating the market
participants from the vagaries of the future.text
The presentation also covered the
benefits of the futures market from the perspective of the businessman and the
farmer. Futures contracts provide information about the cost of goods in the
future which aids the businessman in his financial planning. It also ensures
smooth operations in the future because the business is sure to obtain the
required raw materials. The futures market helps the farmer by providing him the
information needed to make strategic decisions regarding crop selection and
marketing. The discussion also included the methods adopted to assure the
quality and the reliability of the goods.text
Change is the only constant and
nothing survives without adapting. Mr. Aggarwal went on to speak about the
various initiatives and incremental policies adopted by the exchanges like
corporate governance, electronic trading and mark to market accounting designed
to enable fair and transparent trading. He also highlighted the various
awareness programs being taken up by the commission to spread the knowledge
about the futures markets and their benefits.text
The students, always a curious
lot, bombarded Mr. Aggarwal with questions on the nuances of the market, its
functionings and the future of FMC. The evening ended on a positive note and
both Mr. Aggarwal and the students of SJMSOM dispersed content and satiated.
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