Friday, December 4, 2009

NCDEX AVP Mr. VV Ganesan teaches a lesson on Commodity Futures and Derivatives

Mid November saw a flurry of educational lectures. The address by NCDEX's Mr. Ganesan was one that perfectly complemented the course material. He began introducing NCDEX as an electronic exchange dealing with over 900 commodities and having warehouses at all strategic locations. He established the fundamental definition of a market and the demand/supply forces that operate within it. He briefly touched upon the history and the FCREA act that enabled establishment of exchanges like NCDEX, NCX, NMC and the new ICE.
The students seemed to be charged up at the mention of "futures" or the "vayda bazaar". It was surprising for many to know that India had futures trade till the 1960s when it was banned after world war when hoarding was rampant. It made us proud to know that India was the first country to have e-trade for commodities.

He brought out the differences between the commodities market and the stock market with the main difference being the seasonality of goods and the quality/grade assurance one gets. NCDEX is useful in hedging as the payment of the future tranaction amount and quality is guaranteed by the exchange. Unlike the equity market, options are banned in commodity trade in India. He explained how commodity derivates are linked to these future transactions and how they are traded worldwide.

The current initiatives of NCDEX include price discovery for 'mandis' and price risk management for farmers so that they get proper prices for their produce. Mr. Ganesan continues to be passionate about spreading the word in a market where only 1% of transactions are routed through the exchange. He is an associate of the Indian Institute of Bankers and holds a Law degree from the Madras Law College.

The students were definitely left asking for more in the end of the session. The address ended with a enthusiastic question and answers session and Mr. Ganesan providing his personal contact in case of any more doubts.

Team DoMS Interface
Batch of 2011


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