S.V.

INSTITUTE OF MANAGEMENT III

EXECUTIVE SUMMARY

Commodity exchanges in Indian are still at a nascent stage, and there are numerous bottlenecks
in the growth of the commodity futures market. The challenges facing the Indian commodity
markets are very serious in nature and cannot be ignored as they can paralyze the agricultural
futures markets, much against the objective of agricultural liberalization. The main problem is
that the commodity markets are under the control of government
Commodity derivatives have achieved one of the fastest growth rates, probably the highest
among any other developmental initiatives undertaken either in agricultural sector or in financial
sector of a developing economy like India. But certainly this achievement is not just erecting a
castle in air. Reasons are deep-rooted. Indian traders have century old experiences in trading
commodity derivatives. Permitting commodity exchanges to set up an anonymous electronic
trading platform accessible across the nation has given all the required mileage for commodity
Trading to scale new heights.

Compared to the 130 years old stock market, the commodity market is in its nascent stage. It is
very much in consensus that by the advent of commodity derivatives trading, a silent revolution
is building up in the economy. Though trading volumes in this new market is gradually catching
up that in the stock market, yet commodity exchanges are facing challenges that need to be
addressed now. There are certain set of challenges where commodity exchanges require
regulatory amendments to make this market vibrant and some other set of challenges, where
commodity exchanges have to take up the initiatives.
This project is focused on highlighting those challenges which create bottlenecks in the smooth
operations of commodity markets and can slow down its growth. At the end it suggests measures
for creating a free and well regulated market.