Bullion Derivatives : Fulfilling the Market Need for Risk Management

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Bangalore (Karnataka), October 19, 2015: In order to widen the outreach of the commodity futures market, Multi Commodity Exchange of India Ltd (MCX), and Bangalore Jewellers Association jointly organized an awareness programme in Bangalore (Karnataka) on Saturday, October 17, 2015. The programme was mainly aimed at educating the stakeholders of the bullion spectrum about the benefits of price risk management offered by commodity exchanges.

At the onset of the programme, a detailed presentation was made by the experts from MCX, explaining the concept of futures market trading through commodities exchanges. Further, they emphasised on price risk management and price discovery, the two important economic functions performed by the commodity futures market. Later, they elaborated on the topics such as the benefits of hedging bullion price exposures, importance and need for risk management measures, role of commodity futures exchanges etc.

Mr. N. K. Muthappa, Assiatant Vice President-Business Development, MCX, while highlighting one of the many benefits of trading on a commodity futures exchange such as MCX, said, “By virtue of bringing together a large number of participants from different categories, and locations onto a single platform, the futures market becomes an efficient center for price discovery. As the number of participants’ increases, the flow of information also improves, further improving the price discovery process.”

“Separately, we are glad that by way of these awareness programmes we at MCX are able to spread literacy about the commodity futures market in the country so as to enable the market participants to effectively avoid the risks arising from fluctuations in the prices of commodities, including bullion”, he added.

Mr. Ravikumar Y. S., Secretary, Bangalore Jewellers Association said, “I feel that with growing awareness among the participants in India about the commodity futures market there definitely would be an increased participation on exchange platforms such as MCX, mainly because they provide an efficient and excellent platform for hedging against price uncertainty and global volatility. Additionally, they provide transparent price discovery and hedging platform for trading futures contracts of different commodities, including gold and Silver.”

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