What’s In Store For Commodity Markets In India

India needs to centralize and streamline it’s data from the exchanges, but at the same time make sure that the hedgers (producers and users) of commodities can get quick access to the data itself: End of Day data at a bare minimum.

Commodity markets exist for a) Risk Transference; and b) Price discovery. What good is it to have a such markets, yet not get the data into the hands of the people who need it most?

So the evolution of India’s infrastructure has a lot to do with the success of her commodity exchanges.

The exchanges should consider sms/texting the data to the most remote locations in the near-term, at least until there will be electricity running 24 hours a day.

MCX and NCDEX need market makers, traders who will be able to take on bulk orders, and evolve the exchanges beyond the “agency-only” basis. Adding such will smooth the price-discovery process as the market will not be deluged with sell orders nor hammered by an imbalance of buying pressure.

India must embrace the Managed Futures industry from an educational and regulatory standpoint. As an asset class, it shows to reduce risk and enhance returns, but uneducated traders (small speculators) will not reap the same benefits that can be achieved by hiring a professional commodity manager in a PMS-like structure.

The FMC needs to be more progressive and catch up with the rest of India. They should begin looking into allowing foreign commodity investors to trade the local markets to enhance liquidity. The trading platforms are already in place.

Read: Financial Markets in India: A Snapshot

Please note: I reserve the right to delete comments that are offensive or off-topic.