Commodity Eschange

Commodity Exchange

We’ve been talking about stock exchanges a lot lately.

Today let’s take a glimpse at something different yet astounding.

Commodity derivatives exchange

A commodities exchange is an exchange where various commodities are traded. Most commodity markets around the world Trade in agricultural products and other raw materials. Take a second and think about it, isn’t it fascinating how people are using this also as a financial instrument!

Trading includes various types of derivatives contracts based on these commodities such as Forwards, Futures, Spot trades. Spot rates are for the immediate delivery of goods. Suppose it’s predicted that sugar production will be halted for some reason, investors can act on this information and buy stock assigned for sugar that they can sell later. A lot of agriculture traders work on this exchange and make a lot of money. Commodity trading started very early in India, but due to the foreign invasion, it got diminished. In India, we have ICEX, MCEX, and NCDEX.

Now even BSE and NSE have started this, they are starting from non-agriculture commodities.

Let’s talk about each exchange briefly

        1.    Indian commodity exchange (ICEX)

Its SEBI regulated online commodity derivative exchange. They have a headquarter in Mumbai. It provides a nationwide trading platform through its brokers. There are many shareholders of this private company.

Diamond contracts are the biggest contributors to ICSE x.

        2.   Multi commodity Exchange (MCX)

MCX offers to trade in Gold, futures trading in non-ferrous metals, bullion, energy, and some agricultural commodities. In 2016 MCX was 7th among global community exchanges in terms of the numbers of futures contracts traded. In 2017 MCX and Thomson Reuters developed the iCOMEX series.

Fun Fact:– MCX is also listed on the NSE as a stock that you can buy.

      3.National commodity and derivatives index(NCDEX)

NCDEX is a commodities exchange dealing primarily with agricultural commodities in India. NCDEX is second to only MCX.NCDEX is run by a BOD with no interest in agriculture as this keeps things non-corrupt.


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