Commodity Exchanges in Commodity Markets of India: An Analytical Study of National Commodity Exchanges

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1 1 Commodity Exchanges in Commodity Markets of India: An Analytical Study of National Commodity Exchanges Dr. Shree Bhagwat, Asst. Prof., Department of Business Management, Dr. Harisingh Gour Vishwavidyalaya, Sagar, Madhya Pradesh, India (A Central University) Angad Singh Maravi, Research Scholar, Department of Commerce, Dr. Harisingh Gour Vishwavidyalaya, Sagar, Madhya Pradesh, India (A Central university) ABSTRACT Commodity futures trading in India has a long and old history, India s first commodity exchange was established in 1875 with the Bombay Cotton Trade Association. Futures market in bullion was began to emerge in Mumbai in Currently, in India, there are 22 recognized commodity exchanges, of which the six national level electronic multi-commodity exchanges are: NMCE, (Ahemadabad); MCX, (Mumbai); NCDEX, (Mumbai); ICEX, (Mumbai); ACE, (Ahemadabad); and UCX, (Mumbai). India has experienced phenomenal growth in the commodity derivatives markets since 2003, once the Government lifted restrictions on futures trading. At present, there are 6 National Level Commodity Exchanges operates in India. Secondary data collected from books, journals, magazines websites of Forward Markets Commission (FMC) and national level commodity exchanges in India for the period to This paper is an attempt to investigate for the structure and performance of commodity exchanges in India. MCX is the world s largest future s commodity exchange in Silver, Gold, and Crude Oil. The national exchanges accounted for 99.72% of the turnover of commodity futures contracts traded in India during Financial Year MCX alone had a market share of 84.89% in Keywords Commodity Market; Commodity Derivatives Market; Commodity Futures; Commodity Exchanges; FMC 1. INTRODUCTION The concept of organized futures trading in commodities evolved in the middle of the 19 th century. And during the first half of the 20 th century, there were several commodity exchanges trading in jute, pepper, turmeric, potatoes, sugar, etc. Gradually, the farmers (sellers) and dealers (buyers) started committing to exchange the produce for cash in future. The commodity exchanges have, as part of its business models, had to create the necessary infrastructure to conduct their operations. Commodity markets are meeting places of buyers and sellers and the commodity exchange in Indian mainly trade bullion, huge metals, energy and agricultural produced. Unlike developed countries, foreign currency and stock indices are not part of our commodity market and are unlikely to be integrated in near future. Commodity markets in India are still in their initial stages of development. Commodity markets have a huge potential in the Indian contract particularly because of the agri-based economy. With the government s initiative for agricultural liberalization commodities trading in India have gained incased ventures in utilities. Commodity exchanges are for investors and commodity buyers go to purchase futures, derivatives and commodities for trading or profit. A commodity exchange is a place where various commodities and derivatives are bought and sold. Commodities exchanges usually trade on commodity futures. Commodities are being in commodity exchanges. Commodity exchanges provides electronic platform for seller and buyers to trade in multiple options available. An individual cannot directly go to exchange and make the trade. Exchange authorizes brokers, who interact with customers (investors) on behalf of exchange and charges commission/brokerage for their services. At present, in India, there are 22 commodity exchanges, of which the six national level commodity exchanges. The national level exchanges include the National Multi Commodity Exchange of India Limited (NMCE), Ahmadabad; Multi Commodity Exchange of India Limited (MCX), Mumbai; National Commodity and Derivatives Exchange of India Limited (NCDEX), Mumbai; Indian Commodity Exchange Limited (ICEX), Mumbai as a nation-wide multi commodity exchange, Ace Commodity and Derivatives Exchange Limited, (ACE) Ahemadabad and recently, established Universal Commodity Exchange Limited, (UCX) Mumbai. 2. OBJECTIVES OF THE STUDY (i) To study the evolution and organizational structure of commodity exchanges in India. (ii) To analyze the performance of commodity exchanges in India ( to ).

2 2 3. REVIEW OF LITERATURE This study is equipped with comprehensive review on commodity exchanges. Abundance literature on commodity futures trading in general gives theoretical explanation for the emergence of commodity exchanges in India. M. Dhanbhakyam and P. Kamalnath (2010) in his paper Financial Performance of National Commodity Exchange Companies (NMCE, MCX, and NCDEX) in India: A Profitability and Efficiency Focus attempted to study is an investigation into the present status, growth constraints and developmental policy alternatives for commodity futures market in India. The empirical findings of the study in the context of commodity future as a diversifying agent to the equity portfolio are twofold. The study also found that MCX Energy futures do not add any diversification benefit to the portfolio of equities whereas MCX Agri futures are found to be the best diversifying agents. Ghosh M. (2011) in his study Agricultural Policy Reforms and Spatial Integration of Food Grain Markets in India investigated the impact of agricultural policy reforms on spatial integration of rice and wheat markets in India. The results indicate that the extent of intra- and inter-state spatial integration of these markets has improved during the post-reform period relative to the prereform one. The results suggest that in well-integrated food markets, this type of famine could be avoided by suitably designing agricultural price policy and rationalizing government activities in the food economy. Takeshi INOUE and Shigeyuki HAMORI (2012) in his paper Market Efficiency of Commodity Futures in India examined the market efficiency of the commodity futures market in India, which has been growing phenomenally for the last few years. They found that the long-run equilibrium relationship between the Multi-Commodity futures and spot price and then test for market efficiency in a weak form sense by applying both the DOLS and the FMOLS methods. The entire sample period is from 2 January 2006 to 31 March The results show that there is a co integrating relation between them, which means that a necessary condition for market efficiency is satisfied. S. Selvanthan and V. Manohar (2013) in his paper Online Trading-An Insight to Commodities Trade with Special Reference to India examine that the online trading involves investment activity which takes place over Internet and it does not require physical inclusion of the brokers. As the servers of the online trading portal are connected all time to the stock exchanges and designated banks the order processing is done in real time and investor can also have updates on the trading Even though online trading in India has slowed down somewhat at the present time, it is our belief that it will pick up speed the future. M. Venkateswari and Ravindran (2014) in his study Commodity Derivatives Exchanges in India: A study of selected Exchanges examines the Derivatives provide an effect solution to the problem of risk caused by uncertainty and volatility in the underlying assets. In India, the emergence and growth on the derivatives markets is relatively a recent phenomenon. The study is undertaken to analyze the trend of and progress of Commodity Derivatives Trading in NCDEX and MCX and evaluate the performance of these two commodity exchanges. S Poornima, and Deepthy K (2015) in his paper Commodity Market in India investigated the Commodity market has a great potential to become a separate asset class for market savvy investors, arbitrageurs and speculators. The retail investors should understand the risk and advantages before entering into commodity market. The study attempts to throw light on commodity market in India and to find out the impact of the SEBI-FMC merger and also to analyze future growth prospects and challenges of Indian commodity markets. 4. RESEARCH METHODOLOGY The present study is based on the analytical and descriptive research. There is no tool applied due to turnover, values fluctuation from year to year. The National level commodity exchanges in India namely NMCE, MCX, NCDEX, ICEX, ACE, and UCX were selected for the study. The study mainly depends upon the published secondary data. Secondary data are collected from the books related topics, articles, reputed journals; newspapers articles, websites, various reports and records issued and maintained by the Government of India are also used in the study. 5. EVOLUTION AND HISTORY OF INDIAN COMMODITY EXCHANGES The evaluation of the organized futures market in India commenced in 1875 with the setting up of the Bombay Cotton Trade Association Ltd. In India, the first commodity futures exchange was set up in 1875, in Mumbai, under the aegis of Bombay Cotton Traders Association. Subsequently, many exchanges came up in different part of the country for futures trade in various commodities. The Futures trading in oilseeds started in 1900 with the establishment of the Guarati Vyapari Mandli, which carried on futures trading in groundnut, castor seed and cotton. Futures trading in wheat was existent at several places in Punjab and Utter Pradesh. But wheat futures market began at Hapur in Futures trading in bullion began in Mumbai in 1920 and later similar markets came up at Rajkot, Jaipur, Jamnagar,

3 3 Kanpur, Delhi and Calcutta. Calcutta Hessian Exchange Ltd. Was established in 1919 for futures trading in raw jute and jute goods. But organized futures trading in raw jute began only in 1927 with the establishment of East Indian Jute Association Ltd. These two associations amalgamated in 1945 to from the East India Jute and Hessian Ltd. to conduct organized trading in both Raw Jute and Jute goods. During the Second World War futures trading was banned. After independence, the constitution of India brought the subject of Stock Exchanges and futures markets in the Union list The Forward Contract (Regulation) Act was enacted in 1952 and the Forward Markets Commission (FMC) was established in 1953 under the Ministry of Consumer Affairs. FMC acts as a regulatory body, which regulates the commodity markets in India. The futures trade in spices was first organized by the India pepper and Spices Trade Association (IPSTA) in Cochin in The mid-1960 s witnessed an unprecedented rise in the prices of major oils and oilseeds as a result of a sharp fall in output. Futures trade was banned in most commodities to contain speculation, which the government attributed to rising inflation. Later, futures trading was altogether banned by the government in 1966 so that the government could have control on the movement of prices of many agricultural and essential commodities. In 1970 s most of the registered association became inactive, as futures as well as forward trading in commodities were either suspended or prohibited altogether. In 1980 the Khusro Committee recommended re-introduction of futures trading in most of the major commodities like cotton, kapas, raw jute and jute goods. The government, accordingly initiated futures trading in potato during the latter half of After the introduction of economic reforms June 1991, the government of India appointed another committee to review Forward Markets. The committee set up under Chairmanship of Prof. K.N. Kabra in June 1993 and the committee submitted its report in September In order to boost the agricultural sector, the National Agricultural Policy 2000 envisaged external and domestic market reforms and dismantling of all controls and regulations in the agricultural commodity markets. In , The Government of India took two steps that gave a fillip to the commodity markets. The first one was setting up of nationwide demutualized multi commodity exchanges and the second one was expansion of list of commodities permitted for trading. Currently there are six National Level Commodity Exchanges and 23 regional exchanges operating in India. The national level exchanges include National Multi Commodity Exchange of India Ltd., (NMCE), Ahmadabad; Multi Commodity Exchange of India Ltd., (MCX), Mumbai; The National Commodities and Derivatives Exchange Ltd., (NCDEX), Mumbai; which have been working since 26 th November2002, 10 th November 2003 and 15 th December 2003 respectively. NCDEX Spot Exchange Ltd., (NSPOT) is an electronic spot exchange in India, set up by NCDEX on October 18, NSPOT offers an electronic trading platform for trading in a host of commodities, both agricultural and non-agricultural, to various market participants, primary producers, including farmers, traders, processors, etc. MCX has also set up the National Spot Exchange Ltd., (NSEL) in October The mission of NSEL is to develop a common Indian market, by setting up a national level electronic spot market and providing state-of art trading, delivery and settlement facilities in various commodities, which can be accessed from across the country. Indian Commodity Exchange India Ltd., (ICEX), Mumbai as a nation-wide multi commodity exchanges working in ACE Commodity and Derivatives Exchange Ltd., Ahmadabad was granted recognition on 10 th August, ACE became a National Exchange by upgrading itself from a Regional Exchange. The Ministry of Consumer Affairs, Food & Public Distribution, GOI, vide Notification dated 30 th August, 2012, granted recognition to the Universal Commodity Exchange Ltd., (UCX), Mahape, Navi Mumbai on a permanent basis in respect of forward contracts in all the commodities in which Section 15 is applicable and the commodities to which neither Section 17 nor Section 15 of the Forward Contracts (Regulation) Act, is applicable. UCX is the India s 6 th National Commodity Exchange Limited. 6. ORGANIZATIONAL STRUCTURE OF COMMODITY EXCHANGES IN INDIA At present, in India, there are three tiers of regulations of forward/futures trading system, consist the Government of India at set the top, followed by the Forward Markets Commission (FMC) and then the Commodity Exchanges. The commodity futures traded in commodity exchanges are regulated by the Government under the Forward Contracts Regulations Act, 1952 and the Rules framed there under. The regulator for the commodities trading is the Forward Markets Commission, situated at Mumbai, which comes under the Ministry of Finance, Department of Economic Affairs, (Government of India). In the hierarchy of Indian commodity exchanges market, the Forward Markets Commission (FMC) is a statutory body set up the Forward Contracts (Regulation) Act Futures trading and the Forward Contracts (Regulation) Act of 1952 were shifted to Department of Economic Affairs (DEA) from Department of Consumer Affairs (DCA). In September 2013, the regulatory body FMC has been brought under the control of Ministry of Finance. The structure of commodity exchanges market in India is as follow:

4 4 Figure: 1 Structure of Commodity Exchanges The commodity exchanges under the Forward Markets Commission are divided into national and regional commodity exchanges. At present, there are 6 national level commodity exchanges and 23 regional level commodity exchanges operating in India and carrying out futures trading activities in as many as 146 commodity items. As per the recommendation of the Forward Markets Commission (FMC), the Government of India recognized the 6 National Level Commodity Exchanges; these are NMCE, MCX, NCDEX, ICEX, ACE, and UCX. 7. COMMODITY EXCHANGES IN INDIA India has experienced phenomenal growth in the commodity derivatives markets since 2003, once the Government lifted restrictions on futures trading. After Government approval for operation of multiple exchanges, the exchange environment has become highly competitive in terms of product development and business strategies. Private sector initiatives, seeking to tap the potential value of agricultural trading, have become key catalysts in this process. Presently, in India, there are 22 commodity exchanges, of which the six national level multi commodity exchanges, and other regional commodity exchanges. Table 1: List of Commodity Exchanges Recognized by Forward Markets Commission The following are the list of exchanges and commodities in which futures contracts are traded in India are as follow: S. No Name of the Exchanges A. National Exchanges 1 Multi Commodity Exchange of India Ltd., (MCX) 2 National Commodity & Derivatives Exchange of India Ltd., (NCDEX) 3 National Multi Commodity Exchange of India Ltd., (NMCE) 4 Indian Commodity Exchange Ltd., (ICEX) 5 Ace Derivatives and Commodity Exchange Ltd., (ACE) 6 Universal Commodity Exchange Ltd., (UCX)

5 5 B. Commodity Specific Regional Exchanges 7 Bikaner Commodity Exchange Ltd., Bikaner 8 Bombay Commodity Exchange Ltd., Vashi, Bombay 9 Chamber of commerce, Hapur 10 Central India Commerce Exchange Ltd. Gwalior 11 Cotton Association of India, Mumbai 12 East India Jute & Hussian Exchange Ltd. Kolkata 13 First Commodities Exchange of India Ltd., Kochi 14 Haryana Commodities Ltd., Sirsa 15 India Pepper & Spices Trade Association Kochin (IPSTA) 16 Meerut Agro Commodity Exchange Co. ltd. Meerut 17 National Board of Trade (NBOT), Indore 18 Rajkot Commodity Exchange Ltd., Rajkot 19 Rajdhani Oils & Oilseed Exchange ltd., Delhi 20 Surendranagar Cotton oil & Oilseeds Association Ltd., Surendranagar 21 Spices & Oilseeds Exchange Ltd. Sangli 22 Vijay Beopar Chamber Ltd., Muzaffarnagar Source: Forward Markets Commission (FMC), Mumbai Other Regional Commodity Exchanges Not Recognized by Forward Markets Commission S. No. Name of the Exchanges 1 Bhatinda Om & Oil Exchange ltd., Bhantinda 2 East India cotton Association Ltd., Calcutta 3 Kanpur Commodity Exchange Ltd., Kanpur 4 E-Sugar India Ltd., Mumbai 5 Coffee Futures Exchange India Ltd., Bangalore 6 E-Commodities Ltd., New Delhi 7 Bullion Merchants Association Limited, Bikaner NATIONAL COMMODITY EXCHANGES In India, there are six national level commodity exchanges are described below: (1) National Multi-Commodity Exchange of India Limited (NMCE): National Multi Commodity Exchange of India Ltd., India s first state-of art demutualised, electronic, multi- commodity exchange. It is based in Ahmadabad. National Multi Commodity Exchange Ltd. (NMCE), promoted by commodity-relevant public institution viz., Central Warehousing Corporation (CWC), National Agricultural Cooperative Marketing Federation if India (NAFED), Gujarat Agro-Industries Corporation Ltd., (GAICL), Gujarat State Agricultural Marketing Board (GSAMB), National Institution of Agricultural Marketing (NIAM), Neptune Overseas Ltd., (NOL) and PNB Bank took equity of the Exchange to establish that linkage. Contracts traded on NMCE are based on commodities that in clued cash crops, food grains, plantations, spices, oil seeds, metal and bullion, among others. (2) Multi Commodity Exchange of India Ltd., (MCX): MCX is an independent, and demutualised online multicommodity exchange started in It is based in Mumbai. The exchange is promoted by Financial Technologies India Limited, SBI and its associations, NABARD, NSE, Fid Fund (Mauritius) Ltd., an affiliate of Fidelity International-Corporation Bank, Union Bank of India, Canara Bank, Bank of India, Bank of Baroda, HDFC Bank, SBI Life Insurance Co. Ltd., ICICI Ventures, IL&FS and Merrill Lynch. MCX offers futures trading in agricultural commodities, bullion, ferrous and non-ferrous metals, pulses, oil and oilseeds, energy, plantations spices and other soft commodities. (3) National Commodity and Derivatives Exchange Limited (NCDEX): NCDEX is an independent and demutualised online commodity exchange that also started in It is based in Mumbai. NCDEX is promoted by national level institutions like LIC, NABARD, NSE, PNB Bank, CRISIL Ltd., Indian Farmers Fertilizer Co. Ltd., (IFFCO), Canara Bank, Goldman Sachs and ICE. NCDEX lists contracts on a host of agricultural commodities, besides metals, plastics, gold, and energy products. (4) Indian Commodity Exchange Ltd. (ICEX): ICEX incorporated in 2009, ICEX is National online derivative exchange of India which has established a transparent, time-tested and reliable trading platform. It has its headquarter in Mumbai and many regional offices across

6 6 the country which cover agricultural region with a objective to encourage farmers, traders and actual users participation to hedge their position against the extensive price fluctuations. ICEX is promoted by India bulls financial Services Ltd., Reliance Exchange Next Infrastructure Ltd., and MMTC Ltd., KRIBHCO, Indian Potash Ltd., and IDFC among others as its partners. It deals with the commodity trading of bullions, Base Metals, energy and Agricultural Commodities. (5) ACE Derivatives and Commodity Exchange Ltd. (ACE): ACE Derivatives Exchange was set up in It has registered office at Ahmadabad and corporate office at Mumbai. ACE promoted by Kotak Mahindra Group, The Haryana State Cooperative Supply & Marketing Federation Ltd. (HAFED) is an apex State Co-operative service and marketing institution, under the patronage and sponsorship of the Government of Haryana, Bank of Baroda, Corporation Bank and Union Bank of India. It facilitates trading in oil and oilseeds, pluses, Guar Gum, Sugar and in Fiber. (6) Universal Commodity Exchange Limited (UCX): Universal Commodity Exchange Ltd., was set up in UCX prompted by institutions such as IDBI Bank, Indian Farmers Fertilizer Cooperative Ltd., (IFFCO), NABARD, Rural Electrification Corporation Ltd., (REC), and COMMEX Technology. The Exchange facilitates futures trading in gold, silver, crude oil, chana, rubber, mustard seed, soya bean, refined soya oil and turmeric. 8. ANALYSIS OF THE PERFORMANCE OF NATIONAL COMMODITY EXCHANGES Table 2: Total Turnover of Commodity Exchanges- ( to ) The share of Commodity Exchanges in the total value in Rs. Cr. and % of the commodities traded EXCHANGES MCX (82.34) NCDEX (11.82) NMCE (2.94) ICEX (1.76) ,41, (82.36) 14,10, (11.81) 2,18, (1.83) 3,77, (3.16) ACE 30, (0.25) (86.05) (9.99) (1.48) (1.42) ` (0.7 6) (87.00) (10.00) (1.00) (1.00) (1.00) (84.89) (11.30) (1.51) (0.84) (0.46) UCX (0.72) Others (1.14) GRAND TOTAL (0.59) Source: (Forward Markets Commission) (0.30) (0.01) (0.28) The table clearly shows the share of various commodity exchanges in the total value of trade from the year to , which indicates an increasing trend value of traded commodities in to It was crore in which increases to crore in The value of trade crore in which decrease to crore in The total value of trade in the MCX commodity exchange traded 82.34% of the value and increased its share of 87.00% from to , similarly share in value of trade decreased 84.89% in While the NDEX exchange share in value of trade decreased from 11.82% to 9.99% by the and , similarly share in value of trade 10.00% to 11.30% by to While the NMCE exchange share also decreased its share in value of total commodities traded from 2.94% to 1.00% from to , while share in value of trade 1.51% in The National Exchanges, which the adoption of modern technology, have spread the facility of commodity futures trading across the country. MCX recorded the highest turnover in terms of value of trade from to followed by NCDEX, NMCE, and ICEX.

7 7 I. Multi Commodity Exchange of India Limited, (MCX) Table 3: Commodities Traded in Value from to in MCX GOLD (30.07) SILVER (17.86) CRUDE OIL (19.07) COPPER (14.13) NATURAL GAS (5.04) NICKEL (4.31) ZINC (4.07) (25.09) (27.44) (17.92) (11.64) (27.09) (36.79) (15.79) (9.21) (1.67) (4.72) (3.96) LEAD (3.11) (2.47) (25.00) (27.46) (20.04) (9.70) (4.52) (2.90) (2.80) (1.66) (4.14) ALUMINIUM (1.54) (28.83) (20.68) (20.84) (9.02) (7.61) (2.17) (2.66) (4.63) (1.57) COTTON (0.73) CPO (0.72) OTHERS (5.46) TOTAL (6.12) Source: (Forward Markets Commission) (5.32) (1.18) (1.26) MCX is the major contributor in the commodity market in trade of value. From the table has increased in absolute terms over the years from to The total value of trade increased sharply from crore in to Rs crore in , the value of trade decreased crore in to Rs crore in Silver, Gold, Crude Oil and Copper and other commodities increased over the years but the growth is not considerable. The percentage share of Silver in total value of commodities traded in MCX exchange increased from 17.86% to 36.79% from to , similarly share of total value decreased from 27.46% to 20.68% from to While the share of Gold to total value of commodities traded to total commodities decreased from 30.07% to 25.09% from to and then increased to 27.09% in , similarly share of total value decreased 25.00% in thereby increased to 28.83% in Whereas the share of Crude Oil decreased from 19.07% to 15.79% from the year to , and then increased to 20.04% to 20.84% from to Lead was not traded in Natural gas was not traded in year where as zinc was not trade in the year Aluminium was traded in during and Cotton was traded in MCX during CPO was traded only in the year In MCX, Gold, Silver, and Crude Oil were the most actively traded commodities.

8 8 II. National Commodity and Derivatives Exchange of India Limited, (NCDEX) Table 4: Commodities Traded in Value from to in NCDEX COMMODITIES SOYABEAN (10.78) SOYA OIL (14.89) GUAR SEED (28.12) (7.21) (18.46) (17.46) (6.77) (22.97) (17.85) GUAR GUM (5.43) CRUDE OIL (13.69) CHANA (11.58) RAPE MUSTARD SEED (9.24) (7.99) (6.18) (4.76) (15.17) (9.14) (13.64) (34.88) (15.91) (23.55) (9.98) (11.27) CASTOR SEED (5.87) TURMERIC (8.71) PEPPER (5.70) JEERA (3.67) (2.07) (11.60) (7.35) (14.05) (2.58) (4.13) DHANIYA (3.31) COTTONSEED OILCAKE (4.10) KAPAS (2.30) OTHER (13.01) TOTAL (23.31) Source: (Forward Markets Commission) (17.91) (8.46) (2.52) (8.31) (4.45) (3.09) (6.59) NCDEX is second largest commodity exchanges in India. The table shows the annual growth of commodity market in India for period to The total value of trade increased from crore in to Rs crore in , whereas value of trade decreased crore to crore from to The percentage share value of Soya Oil to total value of commodities traded increased from 14.89% to 34.88% from to and then decreased to 23.55% in The share of Soya bean decreased from 10.78% to 6.77% from to and then increased 13.64% to 15.91% from to Pepper was traded only in the year while as guar gum is traded in , crude oil was traded in both and years where as turmeric and jeera was not traded in the years and Guar seed was not traded in both and Castor seed was traded in and Kapas, Cottonseed Oilcake, and Dhaniya were traded in NCDEX during and

9 9 III. National Multi Commodity Exchange of India Limited, (NMCE) Table 5: Commodities Traded in Value from to in NMCE COMMODITIES RAPE/MUSTARD SEED (11.66) (11.14) COFFEE REP BULK (11.00) RAW JUTE (10.41) SACKING (10.64) SOY OIL (9.81) GUAR SEED (8.15) (7.66) (7.75) (9.04) (13.25) (7.36) CASTORSEED (12.38) CHANA (6.52) RUBBER (10.92) COPPER ( 6.99) (9.99) (8.13) ZINC (8.22) NICKEL (8.70) LEAD (6.77) ALUMINIUM 5 MT (6.74) OTHERS (53.22) TOTAL (60.93) Source: (Forward Markets Commission) (7.81) (8.61) (58.99) (8.41) (54.62) (44.21) The table clearly shows the National Multy commodity exchanges in the total value of trade from the year to NMCE Commodity market Rape/Mustard Seed, Sacking, Soya Oil, Guar Seed, Chana and other commodities were traded during the year The total value of trade increased from crore in to Rs crore in , whereas value of trade decreased crore to crore from to Lead was traded in the year Coffee Rep Bulk and Raw Jute were traded in both and years. Rubber was traded only in the year where as Zinc was traded only in the year Copper was traded in and while as Nickel is traded in and Rape/Mustard seed, Coffee Rep Bulk, Raw Jute, Castor seed, Chana and other commodities were traded only in the year

10 10 IV. Indian Commodity Exchange Limited, (ICEX) Table 6: Commodities Traded in Value from to in ICEX COMMODITIES GOLD (43.08) CRUDEOIL (21.22) COPPERCATHODE (20.44) SILVER (13.17) (40.54) (17.94) (17.24) (22.23) (35.16) (15.09) (14.30) (28.95) (11.73) (24.55) (16.79) COPPER (16.02) IRON ORE (7.23) RSO (0.83) NATURAL GAS (0.75) (7.65) (9.39) (18.34) (13.11) CASTOR SEED (11.64) LEAD (0.45) GUARSEED (0.06) MUSTARD SEED (2.57) (16.68) SOYBEAN (8.84) OTHER (2.06) TOTAL Source: (Forward Markets Commission) (3.93) (5.34) (32.70) The value of trade increased crore to crore from to , whereas value of trade decreased crore to crore from to The ICEX Commodity exchange Gold, Crude oil, Copper cathode, Silver, RSO, Natural Gas, Lead, Guarseed were traded in Copper was traded only in where as Iron Ore, and Natural gas were traded in both and years. Silver Iron Ore, Natural gas Castor seed, Mustard seed, Soya bean and other commodities were traded in Castor seed and Soya bean were traded in

11 11 V. Ace Derivatives and Commodity Exchange Limited, (ACE) Table 7: Commodities Traded in Value from to in ACE COMMODITIES REFSOYOIL (48.09) SOYBEAN ( 21.42) (50.74) (17.77) (77.84) (13.29) SOYMEAL (4.86) (29.16) (10.58) CPO (10.38) MUSTARD (14.62) CHANA (10.10) (12.75) (11.34) GUAR SEED (4.96) CASTOR (4.87) SUGAR (0.91) (1.80) COTTON (2.16) RBD (1.76) OTHER ( 2.44) TOTAL 0.00 (0.00) Source: (Forward Markets Commission) (0.09) (44.92) (3.16) ACE Commodity Exchange was commencement in The table shows the increased absolute terms the years from to of commodity futures market in India. The total value of trade increased from crore in to Rs crore in and then decreased crore in The percentage share of Refsoyoil to total value of commodities traded increased 48.09% to 77.84% from to and then decreased to 29.16% in ; whereas share of value of Soyabean decreased from 24.42% to 10.58% from the year to ICEX Market Ref soy oil, Soybean, Mustard, Chana, Castor, and Sugar were traded in the year Guar seed was trade in Soya Meal and RBD was traded in while as CPO was traded only in the year ACE commodity exchange Ref Soy Oil, Soya bean, CPO, Castor Cotton118 and other commodities were traded in the year VI. Universal Commodity Exchange Limited, (UCX) Universal Commodity Exchange Ltd.,, (UCX) Mumbai, was set up in It is the India s 6 th National Commodity Exchange. The total value of trade for the financial year was crore in The percentage share of Chana was the total value of trade 22.62% and second place was Kilo Gold with share 17.67%; whereas share of Rape/Mustard seed was 15.54% in

12 12 9. CONCLUSION The present study is an investigation into the present status, growth and developmental policy alternatives for commodity exchanges in India. India is traditionally an agrarian economy; therefore, instability of commodity prices has always been a major concern of the producers as well as the consumers. In India, two-third of the one billion populations depends on agricultural commodities. Commodity futures markets are a part and parcel of a program for agricultural liberalization. Many agricultural economists understand the need of liberalization in the sector. Futures markets are on instrument for achieving that liberalization. However the recent attempt by the Government to permit National level Multi-Commodity Exchanges has indeed given it, a shot in the armcommodity includes all kinds of goods. The present study is carried out with respect of all six National level commodity exchanges in India namely NMCE, Ahmadabad; MCX, Mumbai; NCDEX, Mumbai; ICEX, Mumbai; ACE, Ahmadabad; and UCX, Mumbai. These exchanges are playing very important role in the trading activities in India. MCX is India s No. 1 commodity exchange. REFERENCES [1] G. Anuradha and Bohra Dimple (2012) Optimizing and analyzing returns in commodity trading using Genetic Algorithm, Simulated Annealing and a novel algorithm ( GaSa), International Journal of Emerging Technology and Advanced Engineering, ISSN No: , Volume 2, Issue-12, December 2012, pp [2] Takeshi INOUE and Shigeyuki HAMORI (2012) Market Efficiency of Commodity Futures in India Published by Institute of Developing Economies (IDE), IDE Discussion Paper No, 370, October 2012, pp [3] S. Selvanathan and V. Manohar (2013) Online trading- An Insight to Commodities Trade with Special Reference to India, Journal of Business Management and Social Science Research (JBM&SSR), ISSN: , Volume 2, No. 6, June 2013, pp [4] M. Venkateswari and G. Ravindran (2014) Commodity Derivatives exchanges in India: A Select Exchanges International Journal of Marketing, Financial Services and Management Research, ISSN No: , Volume 3 (2), February 2014, pp [5] Varadi Vijay Kumar (2012) An evidence of speculation in Indian commodity markets published by Munich Personal RePEc Archive (MPRA), ICRIER, New Delhi, MPRA Paper No , POSTED 24, April :31 UTC, pp [6] Kerala Agricultural University(2011) Commodity Futures Marketing: A primer published by Agricultural Market Intelligence Centre (AMIC), Department of Agricultural Economics, Kerala Agricultural University Thrissur, AMIC Infoseries- 7, date: 10/11/11, available at 7.pdf. [7] Ravi Sunitha (2013) Price Discovery and Volatility Spillover in Indian Commodity Futures Markets Using Selected Commodities PARIPEX-Indian Journal of Research, ISSN No: , Volume 2, Issue 12, December 2012, pp [8] Baskara M. (2007) Commodity Futures Trading in India: A Role of National Commodity Exchanges, MBA (Agribusiness) thesis (published), University of Agricultural Sciences, Dharwad, Department of Agricultural Marketing Co-operation and Agribusiness Management. [9] Ghosh M. (2011) Agricultural Policy Reforms and Spatial Integration of Food Grain Markets in India, Journal of Economic Development, Volume 36, Number 2, June 2011, pp [10] Sharma K R S (2013) A Study of Commodity Futures in India A peer reviewed international journal, ISSN No , Vol. No: 2, Issue 4, June 2013, pp [11] G. Selvalakshmi and A. Arumugam (2014) Impact of Price Level Changes in Indian Commodity Market GRA- Global Research Analysis, Research Paper, ISSN No , Volume 3, Issue-4, April [12] Dr. Shree Bhagwat, Angad Maravi, Ritesh Omre, and Deepak Chand (2015) Commodity Futures Market in India: Development, Regulation and Current Scenario, Journal of Business Management & Social Sciences Research, Volume 4, No.2, February [13] Dr. Shree Bhagwat, Angad Maravi, Ritesh Omre, and Deepak Chand (2015) A Study of Historical Background of Indian Commodity Market, EPRA International Journal of Economic and Business Review, Volume 3, Issue-3, March [14] S. S. Prasad Rao and Ravi Radhika (2011) Commodity Market with Reference to Gold at Inter-connected stock Exchange of India Limited International Conference on Technology and Business Management, GITAM University, March 28-30, [15] Chatnani Niti Nandini (2010) Commodity Markets: Operations, Instruments, and Applications Tata McGraw Hill Publications, New Delhi, ISBN-13: & ISBN-10: , First Edition-2010, pp

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