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Drivers of Volumes

Drivers of Volumes. Outline of the Presentation. Factors leading to higher volumes in certain commodities Intended research to understand missing factor in illiquid commodities Possible solutions that the research may throw up. Volumes - Importance. Price Discovery Easy Entry and Exit

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Drivers of Volumes

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Presentation Transcript

  1. Drivers of Volumes HCT

  2. Outline of the Presentation • Factors leading to higher volumes in certain commodities • Intended research to understand missing factor in illiquid commodities • Possible solutions that the research may throw up HCT

  3. Volumes - Importance • Price Discovery • Easy Entry and Exit • Market remains relevant • Difficult to manipulate HCT

  4. Guar Seed Chana Soya Oil Pepper Jeera Soya Bean Tur Urad Wheat Sugar Agro Commodities with Highest Volumes by Value HCT

  5. Factors leading to Higher Volumes in Guar, Chana and Pepper • Spot Market Dynamics • Awareness Levels of Participants • Regulatory Impact HCT

  6. Spot Market Dynamics • Many Participants in the Supply Chain • Exporter or Importer Interest • Existence of parallel futures market • Shelf Life • Volatility of prices • India - major supplier or consumer of the commodity HCT

  7. Awareness Levels of Participants • Contract Specifications • Delivery Mechanism • Margins (Initial and Exposure) • Mark-To-Market Margins • Spot Polling Methodology • Cash-Settlement versus Delivery-based Settlement HCT

  8. Regulatory Impact • Margins • Near Month Limits • Open Interest Limits • Perception of Regulator among Participants HCT

  9. Additional Factors • Trust enjoyed by Exchange’s mechanisms • Relevance of contract specifications • Spread of members and terminals within trading region • Availability of delivery mechanism HCT

  10. Questionnaire-based approach Questionnaire targeted at traders Results will help us understand what can be done to improve liquidity Focus on following commodities : Coffee Groundnut Mustard Oil Sesame Seed Yellow Peas Cotton Soya Bean Meal Research Methodology HCT

  11. Possible Solutions • Market Makers • One-week Futures • Awareness Programs • Improvement in Delivery Mechanisms • Futures that are Cash-Settled HCT

  12. Thank You HCT

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