SJMSOM-IIT Bombay Organizes Talk by Rajeev Aggarwal on Commodity Futures Market

SJMSOM-IIT Bombay Organizes Talk by Rajeev Aggarwal on Commodity Futures Market

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.

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.

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.

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.

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.

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.

Concluded.

Contributed by -
Prasanth Narayanan (Campus Associate),
PR Secretary,
SJMSOM, IIT Bombay.

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