Determinants of a Successful Commodity Contract - Evidence from Indian Agriculture Futures Market

Released on by Neharika Sobti
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  • Determinants of a Successful Commodity Contract - Evidence from Indian Agriculture Futures Market Book Detail

  • Author : Neharika Sobti
  • Release Date : 2019
  • Publisher :
  • Genre :
  • Pages :
  • ISBN 13 :
  • File Size : 20,20 MB
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Determinants of a Successful Commodity Contract - Evidence from Indian Agriculture Futures Market by Neharika Sobti PDF Summary

Book Description: Every year exchanges introduce new futures contracts in the hope to see those garnering volumes but majority of these contracts have never attracted volumes and died their own death. The history of contract innovation is replete with failures. The aim of this study is an attempt to revisit and decipher the determinants of a successful futures contract with the focus on agriculture commodity futures contracts traded in India. This study also raises concern and doubts the utility of SEBI's long list of criteria for eligibility of a commodity contract and its likely success as circulated in the year 2017. The critical issue is does an exhaustive checklist of criterion as proposed by SEBI guarantees success or the modus operandi should be to explore and understand which is that inherent need that a successful contract satisfies which unsuccessful doesn't. .This issue also has a direct bearing on the viability of having futures and option contract for varying commodities and assets. Is success of a commodity more of a magic than a science is the main debate which has been discussed. Using panel random effects model on 30 agriculture future contracts traded on NCDEX in India from 2003-2016, the study found that volatility in the spot prices of the underlying commodity is the most important determinant followed by hedging effectiveness of contract and presence of hedgers. Contrary to the previous studies, size of the underlying commodity, activeness of spot market, homogeneity did not prove to be significant which highlights an important aspect for policy makers and academicians.

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