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Main issues before the Committee

The main issues before the Committee are the following:

Click to read - Main issues before the Committee

Policy of Government of India on Speculation

Futures industry has been gaining wide recognition as an important risk-management vehicle throughout the world. Besides the producers, processors and purchasers who hedge their price risk in futures market, the uncertainty surrounding the floating currencies and the unending spiraling inflation have also led many others to invest in commodity futures as a hedge against the declining value of paper money.

Click to read - Policy of Government of India on Speculation

Powers of the Forward Markets Commission

The powers of the Forward Markets Commission can be divided under three heads, viz

Click to read - Powers of the Forward Markets Commission

Act, 1952

As an executive, it given directions to recognized associations and exercises such other powers as may be assigned to it any or under this Act, 1952 are:

Click to read - Act, 1952

The forward markets commission

The Forward Markets Commission was established in September 1953, to advise the Government as to how the provisions of the Forward Contracts (Regulation) Act can be put into operation in purposeful way.

Click to read - The forward markets commission

The Forward Contracts (Regulation) Act, 1952

The principal features of the Forward Contracts (Regulation) Act, 1952 are as follows:

Click to read - The Forward Contracts (Regulation) Act, 1952

Regulation of Futures Trading

In India, futures trading was started for the first time in 1875 in cotton and in oil seeds in 1900 at Bombay; in raw jute and jute goods at Calcutta in 1912 and wheat at Hapur in 1913. the machinery for regulation was evolved gradual after futures markets have been in existence already for many years.

Click to read - Regulation of Futures Trading

Dangers of Speculation

Therefor, futures markets are not an unmixed blessing. The futures market enables large number of persons with inadequate knowledge and insufficient means to entertain commitments beyond their capacity.

Click to read - Dangers of Speculation

Following economic advantages

Speculation, involving an intelligent forecast of the future trend of prices of certain commodity, provides the following economic advantages:

Click to read - Following economic advantages

Speculation in Commodity Exchanges

Speculation involves buying and selling for the purchase of profiting form uncertain fluctuations in price. It takes place in 'futures. 'In a genuine trading transaction, the parties intend to take or give delivery at the due date.

Click to read - Speculation in Commodity Exchanges

Better standing of the nature of hedge operations

The examples given below will facilitate a better standing of the nature of hedge operations:

Click to read - Better standing of the nature of hedge operations

Mechanics of Hedging

A person enters into a hedge contract when his transaction in the spot market is covered by a reverse transaction on the futures market. In other words, a hedger's transaction in the futures market usually corresponds to a previous purchase or sale in the spot market.

Click to read - Mechanics of Hedging

Do Futures Prices Affect Spot Prices ?

The price of any commodity, for forward delivery is always determined after deliberations and negotiations between the buyer and the seller. In these negotiations, they are generally influenced by their own judgment of the current and anticipated future supply and demand of the commodity and the present and the expected p[rices thereof.

Click to read - Do Futures Prices Affect Spot Prices ?

Basis of Futures Prices

The supply and demand conditions governing the commodity influence the futures prices as they do the spot prices.

Click to read - Basis of Futures Prices

Technicalities

'Buying and selling of futures contract represents only a promise to buy and a promise to sell a commodity in general with delivery promised for at some specified future month but not necessarily taking place.

Click to read - Technicalities

The Tone of The Market

The tone of the market is explained by the use of the following words: quiet, firm, cheerful, steady, strong, bullish, nervous, depressed, bearish, dukll, erratic, hesitant irregular etc.

Click to read - The Tone of The Market

Ceiling and Floor Prices

Click to read - Ceiling and Floor Prices

Price Fluctuations

The price fluctuations in a commodity are usually explained by the use of the following words:

Click to read - Price Fluctuations

Budla Transactions

When prices of commodities do not move according to the expectations of the operators, the forward or futures contract can be settled by carry-over or 'budla.' thus, a speculative transaction which is carried over is called a budla transaction.

Click to read - Budla Transactions

Options Dealings

An operator in a commodity exchange may purchase a right to buy or sell certain commodities within a fixed time at price, agreed at the time, the option is purchased.

Click to read - Options Dealings

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