Course Outline


Introduction to Commodity Markets
  • Explains the role of commodity exchanges in India
  • Discusses the global commodity markets across the world and their emergence
  • Discusses the evolution of commodity markets in BRIC Nations
  • Discusses the history of commodity derivatives in India
  • Discusses the various policy initiatives regulating forward contracts in commodities all over India
  • Describes the structure of the Indian commodity market and their roles respectively
  • Describes the role of various players in the commodity exchange & trading system
  • Discusses the future prospects, growth and latest development in the commodity exchange market in India
  • Explains the benefits of commodity markets in India
Commodity Exchange
  • Discusses the role of commodity exchanges in India facilitating trade
  • Describes the chief commodity exchanges in India – NCDEX, MCX, NMCEIL, ICEX
  • Discusses various types of commodities traded in India and their categorization
  • Discusses the active commodities and contracts on MCX and NCDEX
Segments in Commodity Markets
  • Explains the role of OTC markets and their functioning
  • Discusses the various exchange traded commodities
  • Discusses the functioning of spot markets, difference between spot & Forward transaction and exchange traded and OTC
  • Explains the meaning of derivatives and their function
  • Discusses the various products and instruments categorized as derivatives
  • Discusses the functions and benefits of derivatives
  • Describes the role of the various participants trading in the derivatives market
  • Discusses the types of derivatives markets - Financial and Commodity derivative market
  • Difference between commodity and financial derivatives on the basis of physical settlement, delivery & assignment, warehousing etc.
Commodity Derivatives
  • Explains the role and features of forward contracts
  • Discusses the limitation of forward market and contracts
  • Explain futures and standard features of future contracts
  • Explains the differences between future and forward contracts
  • Illustrates the various terminologies used in future contracts
  • Discusses the difference between investment assets and consumption assets
  • Discusses the process of pricing commodity futures
  • Discusses the process and features of pooling and bootstrapping
  • Discusses the Cost of Carry Model
  • Discusses the process of pricing future contracts on investment and consumption commodities
  • Explains the various methods of using commodity futures
Hedging , Speculation and Arbitrage
  • Explains the purpose, methods of hedging
  • Explains the meaning, purpose and benefits of short hedge and long hedge
  • Discusses the mechanism of hedge ratio
  • Discusses the advantages and limitations of hedging
  • Discusses advantages and disadvantages of hedging
  • Explains the meaning of speculation and optimal speculation strategies
  • Discusses the advantages and disadvantages of speculation
  • Discusses the concept of arbitrage and mechanism to implement arbitrage theory
  • Describes the concept of option and various option terminologies
  • Discusses the difference between futures and options
  • Discusses the different approached used to perform market analysis – Technical, fundamental, quantitative and sentimental analysis
  • Discusses the functionalities of futures trading system
  • Discusses the various entities involved in the trading system such as TCM, PCM, STCM
  • Discusses the guidelines outlined for the allotment of client code
  • Explains the commodity futures trading cycle
  • Discusses the different order types and the required conditions or trading parameters to be fulfilled to enter trading system
  • Explains the meaning of each order entry on the trading system and their functionalities
  • Explains the process of placing order, maintaining order books and understanding net position
  • Explains the margins for trading in futures and the types of margins applicable to future trading in commodities
  • Discusses the various charges involved in trading through exchange such as transactional charges, collection, due date charges etc
  • Explains the hedging policy and the assignment of hedge limits and the prescribed conditions
Clearing and Settlement
  • Explains the three components involved in commodities exchange – Trading, clearing and settlement
  • Explains the process of clearing, role of clearing houses, mechanism of clearing, need of clearing banks and functions of depository participants
  • Explains the process of settlement, types of settlement, different types of settlement price, settlement mechanism and methods of settlement
  • Explains the concept of warehousing in terms of commodity exchange, applicable guideline
  • Discusses the quality of underlying assets and functions of a warehouse
  • Explains the role of an approved Registrar & Transfer agent and approved Assayer
  • Discusses the indicative warehouse charges of NCDEX
Risk Management & Margining
  • Explains the mechanism of managing risk in future market
  • Discusses the regulations and procedures for margins and limits applicable to members and their clients
  • Discusses the computations of initial margins using SPAN system
  • Illustrates the implementation aspect of margining and risk management
  • Explains the effect of violation
Electronic Spot Exchange
  • Discusses the need for electronic spot exchange
  • Discusses the role and constitution of NCDEX Spot Exchange Ltd (NSPOT)
  • Discusses the role and constitution of National Spot Exchange Ltd (NSEL)
  • Explains the process of trading, functionalities of the trading platform and the memberships offered
  • Illustrates the advantages of Electronic Spot Exchange to farmers, traders, arbitrageurs and future exchanges
Regulatory Framework
  • Discusses the rules governing commodity derivatives exchanges / participants
  • Discusses the rules governing trading & clearing on the exchange
  • Discusses the rules governing investor grievances, arbitration
  • Discusses the implication of VAT such as settlement on account of VAT, raising invoice