Year: 2020

Resistance to change can manifest itself in several different ways. It could come in the form of missed deadlines, failed commitments, being absent from meetings, and a general sense of apathy are all indicating signs that employees are not invested in the organization.

Resistance to change could also present itself in more obvious ways. When change is occurring, pay attention to your employee’s general mood, whether there is more gossip than usual, or if they are responding to requests in a sarcastic or snide manner.

In some cases, there may be an individual elected by the employees to speak out against the change. This may be in the form of an official union or just a collection of individuals who share the same feelings towards the change and see that there is power in numbers.

The surprising benefits of resisting change

Contrary to common belief, resistance to change is not inherently bad. In fact, it can actually be a good thing.

First, it forces management to choose their battles carefully. Employee pushback begs the question, “Is this change going to drive significant growth?” In other words, is this worth it? This helps ensure resources aren’t thrown into initiatives that don’t have a clear payoff.

Second, it encourages planning and communication. Management must identify where resistance will likely occur and come in with a game plan to prevent it.

So now that we are a little less frightened of change, and resistance of it, let’s explore how to best manage employees during organizational change. 

Effective change management is all about understanding what underlies resistance to change. From there, you can address your employees’ biggest concerns.

Top strategies to overcome unproductive resistance to change

1. Listen First, Talk Second

The first strategy to overcome resistance to change is to communicate. Communication is key you already knew that. However, try letting your employees initiate the conversation. People want to be heard, and giving them a chance to voice their opinions will help alleviate the frustration they feel over the situation.

What’s more, your employee’s thoughts, concerns and suggestions will prove wildly valuable to steer your change project. At the very least, understanding them will help you pinpoint the root of employee resistance to change.

2. Communicate the Reasons for Change

The next strategy to overcome resistance to change is to communicate the why, what and how. Develop a communication plan that is more than just telling your employees what you want them to do. Effective communication segments and targets each audience, focusing on what they care about and need to know. Underline why this change will benefit them.

3. Get Excited

How you communicate the change has a huge impact on how much resistance to change will occur. If you wholeheartedly communicate the reasons for change, your conviction will be contagious. Any hesitancy will undermine the operation.

4. Make it About Employees

Change is only possible if your human resources are on board, so make sure changes are approached in terms of the employee. If you are implementing a new software system plan your project through the lens of user adoption rather than focusing on the technology. It’s not about what the technology can do, it is about what the user can do with the help of this new technology.

5. Delegate Change

A great strategy to overcome resistance to change is: Fight resistance with culture. Train team members who are natural leaders first. They will serve as role models and influencers for the rest of your employees. This has a ripple effect.

6. Show Them the Data

While resistance to change is usually emotional rather than logical, it can be helpful to use some hard facts as a supplementary strategy. Let your employees see the data for themselves. This is a great way to simultaneously show transparency and demonstrate the need for improvement.

7. Implement in stages

Whether digital or other, any kind of transformation can’t just happen overnight. There had to be proper preparation leading up to the change, with plenty of advance warning and participation from employees at all levels. Implementing the plan in stages will employees are able to tackle the change one step at a time, learning the new and relevant skills as they go.

This is a much easier way to digest the change and will feel less drastic for those learning new skills and information, meaning they are less likely to resist the changes at hand.

8. Practice change management exercises

Resistance to change is usually driven by emotions such as fear and feeling threatened. To help combat this there are a number of simple exercises employees can do to simulate the feeling of change. These exercises, which include folding your arms one way and then switching them around or bouncing balls to show companies “bounce back” are also just a bit of fun and are non-threatening unlike genuine change can be. The point of these exercises is to show that though change may be uncomfortable at first, you get used to the new reality pretty quickly.

In an economy, financial transactions hold an important place as it helps in assigning people’s savings and investments. Financial instruments like commodities, securities, currencies, etc. are made and traded by investors in the market. Financial markets are often classified depending on the time of delivery.

Cash Market

Also known as the spot market, securities and commodities like shares and bonds of precious metals, agricultural produce, etc. are traded for immediate delivery. There are 2 sections in this market; debt and equities. The deal between the concerned parties is settled by T+2 or 3 days to the date when the trade happened. The cash market is regulated by SEBI. One can trade in the cash market through Bombay Stock Exchange, National Stock Exchange, Commodity Exchange or a Foreign Exchange Market. It’s a place where the buying and selling of commodities are mutual and is undertaken by government, the general public, other companies, etc.

Future Market

This refers to the market where future contracts are traded at an agreed date and price in the future. In the contract between the parties, one party decides to buy a certain commodity at an agreed price. This has to be delivered on a specific date mentioned by both the parties. The regulators for the future market are Securities Exchange Board of India and Forward Markets Commission. The future market exchanges in India are BSE (Bombay Stock Exchange) and NSE (National Stock Exchange).

Difference

Ownership: In the cash market, one remains the shareholder of the company as long as he/she holds the shares. Whereas, in the future market, one can never become a shareholder as he/she just holds positional stocks which have to be traded at the end of the agreement.

Payment: In the cash market, at the time of buying shares, the whole amount has to be paid. While initiating the future market trade, only a small amount of money has to be paid.

Size: A single share of the company can be brought in the cash market. A pre-defined amount or size has to be brought in case of the future market.

Tenure: You can hold the stock for a lifetime in the cash market. Sometimes the stocks can also be passed on or transferred to the future generations. In the future market, you can only hold it for a pre-determined period of time, i.e. the expiration, which usually means 3 months.

Dividends: You’ll receive dividends on the cash market stock as a shareholder of the company. In the case of future market stocks, you’ll not receive any dividend. This also stands true for other benefits like bonus, shares, etc.

Risk: There is a risk factor in both these markets, but it could be higher in the future market as you have to settle the contract in a specific time and also note down the losses. With cash market stocks, you can decide to sell it at your convenience or when it reaches a higher price.

A Safe Refuge during Crisis

Often investors do not feel confident about investing in commodities but think about precious metals like silver, gold, and platinum; they offer a clear protection during inflation and times of economic uncertainty. They are a good source of investment even during tough times.

Diversified Investment Portfolio

An ideal asset allocation plan means having a diversified portfolio. Commodities are an important component of having a diversified investment portfolio. If you are already investing in stocks and bonds, it is suggested that you consider investing in raw materials simultaneously. This way, whenever there is a stock market crash, you are not putting all your eggs in a single basket.

Often, the values of commodities see a downfall just like stock market shares. They react differently in various geo-political and economic scenarios. Diversification, thus, is more likely to improve risk-adjusted returns and reduce volatility.

Transparency in the Process

Trading in commodity futures is a transparent process. The course of action leads you to fair price discovery which is controlled by large-scale participation. Such a huge participation also reflects different perspectives and outlook of a wider section of people who are dealing with that commodity.

Profitable Returns

Commodities are riskier form of investments with huge swings in prices. Companies either hit it right on a resource discovery or experience heavy losses. This opens up opportunities for you to make profits in the commodity market provided you plan your investments right.

Hedging

Whenever the rupee becomes less valuable, you need more money to buy commodity goods from different parts of the world. Especially during inflation, the prices of commodity goods go up as other investors sell off their stocks and bonds to invest in commodities. Therefore, you can be benefit from some commodities in your portfolio that act as a potential hedge against risks.

Protection against Inflation

When the economy is dipping, money is worth less inflation occurs. The prices for commodities usually go up during high inflation; accordingly the price of raw materials also sees an upward trend. Therefore, a few commodities in your portfolio will help you benefit from this upswing.

Trading on Lower Margin

As a trader, you need to deposit a margin with your broker which can be close to 5 to 10% of the total value of contract, which is much lower considering other asset classes. Such a low margin allows you to take larger positions at a lesser capital.

Daily mark to market settlement and final settlement in respect of admitted deals in futures contracts shall be cash settled by debit/ credit of the clearing accounts of clearing members with the respective clearing bank. All positions (brought forward, created during the day, closed out during the day) of a clearing member in futures contracts, at the close of trading hours on a day, shall be marked to market at the daily settlement price (for daily mark to market settlement) and settled. All positions (brought forward, created during the day, closed out during the day) of a clearing member in commodity contracts, at the close of trading hours on the last trading day of the contract, shall be marked to market at final settlement price (for final settlement) and settled.

Fund Settlement

Funds settlement shall be effected through designated clearing banks of NCL. Every participant shall be required to have a separate settlement account with one of the approved clearing banks for commodity Derivatives Fund settlement. All the funds settlement will be conducted by effecting debits / credits through electronic transfer of funds in the accounts of participants clearing bank accounts.

The pay-in and pay-out of mark to market settlement, final settlement of commodity derivatives, additional settlement shall be effected in accordance with the settlement schedule issued by the Clearing Corporation periodically. Along with mark to market settlement and final settlement of commodity derivatives there are few other transactions which are effected in settlement. The said transactions include EPI, Margin, Penalty, CTT, ABC/BC collection/release. These transactions are part of settlement which gets collected/released from/to members settlement account.

Funds Supplementary Settlement would happen on basis of Quality difference, Quantity difference, Delivery center, Packaging cost and penalty for short delivery. For such instances, NCL would create transactions and collect the same (Pay-in/Pay-out) from the clearing members. NCL will create funds transactions as a sum of compensation amount and replacement cost which is cumulatively termed as penalty and funds will be collected from the defaulting seller as a part of supplementary settlement.

NCL sends pay-in obligation reports to clearing banks on clearing day mentioning the details of transactions of members along with amount for arrangement of funds on settlement day.

Fund shortage handling

Buyer default is not permitted. Commodity pay-out shall not be executed to the receiver in case of fund shortage by the buyer.

Delivery shortage handling

Penalty as specified by SEBI shall be levied on seller in case of delivery default (default in delivery against open position at expiry in case of compulsory delivery contracts, default in delivery after giving intention for delivery).NCL shall have appropriate deterrent mechanism (including penal/disciplinary action) in place against intentional/wilful delivery default.

India is a primarily commodity-based economy due to its relatively very high consumption’s capacity both in terms of hard and soft commodities. According to an estimate two-thirds of a billion people in India are engaged in agri-based activities both directly and indirectly related to the agricultural sector. Unlike the physical trading market, the commodity market in futures is largely used as a part of a risk management mechanism on either physical commodity itself or open positions of commodity stocks. It was one of the most lively and vibrant markets until early 1970. It was slowed down a little during further decades due to a number of restrictions and controls which hampered the development and growth of the same. But since most of these restrictions have been removed due to the globalization of the Indian economy, there is a tremendous potential of growth of commodity market in India. Commodities, in fact, have become a separate asset class for market-oriented investors and speculators.

Lately, retail investors have also been able to realize the depth and potential of commodity trading. With these understandings, they are now more knowledgeable about the basic fundamentals of demand and supply of this market. Another encouraging factor in popularizing the commodity market among the retail segment is that commodities future are less volatile as compared to that with stocks and bonds. This facilitates the wider options for diversification of the portfolio.

In fact, the size of the commodity market in India is also quite significant. Of the total GDP of about Rs. 13, 30,000 crores, commodity-related industries constitute 58% of this figure. Further, currently, various commodities across the Indian economy register about Rs. 1, 40,000 Crores mark.

Indian commodity market has a wide range of products vise. Precious metals, base metals, crude oil, energy and soft commodities like plan oil, coffee, etc. which are traded on various domestic and international platform and market places. The Indian commodity exchanges have made a big leap since their existence with multiplying volume every year. According to an analysis made by forwarding market commission (FMC), the Indian commodity trading level has increased 120 times since electronic trading was introduced in 2003.

The MCX (Multi commodity exchange) is the world’s largest exchange in silver, the second largest in Gold, copper and natural gas and third largest in crude oil futures. However, the exchange-traded commodities account for only a fifth of the total volume of commodities traded in India. At the global level, the future market in commodities is about 30-40 times the size of physical commodities trade. More of this difference indicates the more thinly spread of risk across the market. So evidently there is tremendous scope for increase in the volumes of commodity trading in India.

The rising trade volumes of commodities traders are mainly due to the fact that it provides an efficient platform for hedging against price and other economic uncertainties or global volatility. The commodity exchange provides a transparent discovery of price. On these exchanges, the active participation of stakeholders of the commodity value chain facilitates fair value price. This could happen only because of the easy accessibility of information on demand and supply condition of the market.  

The Total Trade Value of Trade:

2011 – 12: 181.26 lakh crore

2010 – 11: 119.49 lakh crore

2009 – 10: 77.65   lakh crore

The major commodities traded at the exchanges were Bullion, base metals, energy products and agricultural commodities. 

The outstanding commodities were gold, silver, copper, lead, Nickel, zinc, chana, soy oil, guar seed and crude oil. 

Various awareness and capacity building programmes, implementation of the Price Dissemination Project at APMCMandis were held by the Forward Commission amongst stake holders as the focus was on the regulation of futures trading in commodities. 

The Focus of The Commission In The Upcoming Years:

1. Consolidate the market
2. Strengthen regulation
3. Generate confidence amongst the participants
4. Keep the market free from manipulation
5. Increase awareness among the stakeholders
6. Empower the farmers with price information
7. Encourage and facilitate intermediaries such as aggregators to facilitate the participation of farmers in the market for hedging.

The below exchanges contributed 99.84% of the total value among twenty-one recognized exchanges. 

Multi Commodity Exchange (MCX), Mumbai, National Commodity and Derivatives Exchange (NCDEX), Mumbai, National Multi Commodities Exchange, (NMCE), Ahmedabad, Indian Commodity Exchange, Ltd., Gurgaon, ACE Derivatives and Commodity Exchange, Ahmedabad, National Board of Trade (NBOT), Indore.

Although the futures trading in a few agricultural commodities were suspended, the Indian Commodity Futures Markets continued to grow. 

113 commodities were regulated under the auspices of the recognized Exchanges during this period. 

21 recognized exchanges were functioning during 2011-12. 

The outstanding traded commodities among 113 regulated by FMC were Silver, Gold, Copper, Nickel, Zinc, Lead, Soy Oil, Guarseed, Chana, Pepper, and Jeera.  

Functions

1. Providing a Market Place:

A commodity exchange provides a convenient place where the members can meet at fixed hours and transact busi­ness in a commodity according to a certain well established rules and regulations. This type of facility is very important for trading in such com­modities as are produced in abundance and cover a very wide field as far as trading therein is con­cerned.

2. Regulating Trading:

As organised markets commodity exchanges establish and enforce rules and regulations with a view to facilitating trade on sound lines. The rules define the duties of mem­bers and lay down methods for business transac­tion.

3. Collecting and Disseminating Market In­formation:

The buyers and sellers on the commod­ity exchange enter into deals for settlement in fu­ture after making an assessment the trends of price and the prospects of a rise or fall in prices of a com­modity. The commodity exchange acts as an asso­ciation of these traders collecting the necessary in­formation and the relevant statistical data and pub­lishing it for the benefit of traders all over the country.

4. Grading of Commodities:

Commodities which are traded on the commodity exchanges have, to be graded according to quality. In this manner, the dealers can quickly enter into agree­ments for the purchase and sale of commodities by description.

5. Settling Disputes through Arbitration:

The commodity exchange provides machinery for the arbitration of trade disputes.

Roles

While performing these functions the com­modity exchanges render a variety of valuable serv­ices to the producers, consumers, traders and oth­ers in the community.

The most important of such services are as follows:

1. The exchanges provide a ready and continu­ous market for the purchase and sale of commodi­ties. The producer is enabled to be independent of the middlemen.
2. By providing hedging facilities, the com­modity exchanges reduce the effect of fluctuations in price.
3. The commodity exchanges provide the pro­ducers an opportunity to transfer their risk to the professional risk-bearers.
4. By providing continuity in the trading of commodities, the commodity exchanges induce bankers and financiers to lend against commodi­ties.
5. The commodity exchanges provide facilities and opportunities for arbitrating and thus equalize the price levels of commodities at various centres.

Objectives

The organised market represents a public or­ganisation consisting of buyers, sellers, producers, traders and dealers dealing in one or more com­modities which constitute the articles of trade in the market. The exchange for commodity is a private as­sociation of dealers and is not for making money or profit or for fixing prices.

Its objectives are to provide an open platform for the interaction of free play of the forces of demand and supply. It only registers the prices reflecting the forces of de­mand and supply. Buying and selling, trading practices and ac­tual working of the organised market are governed by a code of rules and regulations and these can ensure fair dealings, fair prices and equity.

Nature

Nature of Commodity Exchanges:

1. Best facilities available for close and continuous contact between total demand and total supply both present and potential.
2. All businesses are governed by rules and regulations and these rules are strictly enforced by the exchange authorities.
3. Usually the exchange enjoys internal au­tonomy and it is self-regulated, self-administered and self-disciplined autonomous body. At present, almost in all organised markets there are special legislations to control the activities of these organ­ised markets.
4. There is free competition of buyers and sell­ers. The forward markets for commodities and se­curities are also known as two-way auction mar­kets. Open public outcry gives offers and bids by sellers and buyers. They also use finger signals to declare their prices and amounts.
5. Every forward market has a clearing house organisation to facilitate clearing of all dealings and their settlement. The clearing house guarantees payment of dues and taking and giving of delivery of commodities or securities during the settlement period.
6. An organised market acts as a clearing house of market information, i.e., collection of all facts and figures and regular publicity of all relevant sta­tistical information which helps the traders to esti­mate and forecast price trends, changes in demand and supply. Constant price quotation services en­able people to make their purchases and sales with certainty and confidence.
7. The speculative trader is a necessary and vi­tal part of any broad and stable commodity or se­curities market. Speculation is an integral part of market mechanism whether in stock exchange or in commodity exchange.

Types

Types of Commodities in the market, available for trading are categorised into the following classes, based on their inherent nature:

Hard commodities:

Precious metals – Gold, platinum, copper, silver, etc.

Energy – Crude oil, Natural gas, gasoline, etc.

Soft commodities :

Agriculture – Soybeans, wheat, rice, coffee, corn, salt, etc.

Livestock and meat – Live cattle, pork, feeder cattle, etc.

As of 2019, some examples of commodities in the market that were most commonly traded in major commodity exchanges in India included crude oil and silver. While crude oil acts as one of the most important energy sources required for virtually every industry, silver is one of the most precious metals other than gold with a steady demand.

As crude oil is not domestically available in abundance, almost 82% of it is imported from OPEC and Middle Eastern countries. Similarly, silver is traded in extensive quantities from countries such as Mexico, Peru, etc.

A commodities exchange is an exchange where various commodities and derivatives products are traded. Most commodity markets across the world trade in agricultural products and contracts based on them. These contracts can include spot prices, forwards, futures and options on futures.  As of now there are six commodity exchange market in India.

Commodities exchange is an exchange, or market, where various commodities are traded. Most commodity markets around the world trade in agricultural products and other raw materials (like wheat, barley, sugar, maize, cotton, cocoa, coffee, milk products, pork bellies, oil, and metals). Trading includes and various types of derivatives contracts based on these commodities, such as forwards, futures and options, as well as spot trades (for immediate delivery).

A futures contract provides that an agreed quantity and quality of the commodity will be delivered at some agreed future date. A farmer raising corn can sell a futures contract on his corn, which will not be harvested for several months, and gets a guarantee of the price he will be paid when he delivers; a breakfast cereal producer buys the contract and gets a guarantee that the price will not go up when it is delivered. This protects the farmer from price drops and the buyer from price rises. Speculators and investors also buy and sell these contracts to try to make a profit; they provide liquidity to the system.

Some of these exchanges also trade financial derivatives, such as interest rate and foreign exchange futures, as well as other instruments such as ocean freight contracts and environmental instruments. In some cases these are mentioned in the lists below.

These six exchanges are explained below one by one.

1. National Multi Commodity Exchange:

Establishment: 2002

Headquarter: Ahmedabad

Promoters:

• Central warehousing corporation
  • Gujarat State Agricultural Marketing Board
  • Gujarat Agricultural Industries Corporation Limited
  • National Institute of Agricultural Marketing
  • Neptune Overseas
  • Punjab National Bank

Trading Commodities:

• Castor Seeds
  •  Rapeseed
  •  Mustard
  •  Soyabean
  •  Seasame
  •  Copra
  •  Black Pepper
  •  Gram
  •  Gold
  •  Aluminum
  •  Copper
  •  Lead
  •  Nickel
  •  Zinc
  •  Rubber
  •  Jute
  •  Coffee
  •  Isabgoal

2. Multi Commodity Exchange of India Ltd (MCX):

Establishment: Nov. 2003

Headquarter: Mumbai

Achievements:  MCX holds 86% market share of commodity exchange in India. It operates in more than 40 commodities. It is the world’s largest exchange in silver and gold.
Promoters:
• National spot exchange limited, India energy exchange, Singapore mercantile exchange global board of trade, IBS Forex, National Bulk Handling Corporation, ticker plant lilited.
Trading Commodities:
• Metal
• Bullion
• Fibre
• Energy
• Spices
• Plantations
• Pulses
• Petrochemicals
• Cereals

3. National Commodity and Derivatives Exchange Limited (NCDEX)

Establishment: Dec. 2003

Headquarter: Mumbai

Promoters:  ICICI Bank, LIC, NABARD, CANARA BANK, PNB, CRISIL, IFFCO, Goldman Sachs, Intercontinental Exchange, Renuka Sugar, J.P. Capital

Commodity Traded: It facilitates the trade of 57 commodities.
• Cereals and pulses
• Fibres
• Oil and oil seeds
• Spices
• Plantation products
• Gold silver
• Steel
• Copper
• Crude Oil
• Brent Crude Oil
• Polyvinyl chloride
4. Indian Commodity Exchange (ICEX):

It is a screen based online derivatives exchange for commodities.

Establishment: Nov. 2009

Headquarter: Gurgaon

Promoters:  It has Reliance Exchange Next Ltd. as anchor investor and has MMCTC ltd. India Bulls financial Services Ltd, Indian Potash Ltd., KRIBHCO and IDFC.

Commodity Traded:
• Gold
• Silver
• Copper
• Lead
• Crude oil
• Natural gas
• Mustard
• Soyabean
• Soyabean oil
• Jute
• Menthe oil
• Iron ore

5. Shariah Index

The Bombay stock exchange and Taqwaa advisory and Shariah investment solutions have launched it.

Establishment: Dec. 2010

Headquarter: Gurgaon

This is the first Shariah index created in India utilizing the strict guidelines and local expertise of a domestic Shariah Advisory Board. The index comprises the 50 largest and most liquid shariah compliant stocks within BSE-500.

6. Universal Commodity Exchange:

It’s a national level electronic commodity exchange in India.

Establishment: April, 2013

Promoters: Commex Technology, IDBI Bank, IFFCO, NABARD and REC.

Commodity Traded: It deals in 11 commodities.
• Gold
• Silver
• Crude oil
• Chana
• Rubber
• Mustard
• Soyabean
• Refined soya oil
• Turmeric

International

The major commodity exchanges can be listed here as under on the basis of their continent wise location.

• London Metal Exchange (LME) – Europe

It is a future exchange with a large market for options in metals. It is considered as a world’s major market for non-ferrous metals.

• Climax – Netherlands – Europe

This is an exchange for energy contracts and environmental commodities.

• Chicago Mercantile Exchange (CME) – USA

It is a derivative and commodity market. It offers a range of future and option contracts.

• New York Mercantile Exchange (NYMEX) – USA

It is the largest commodity futures exchange in the world in physical terms.

• Dubai Mercantile Exchange (DME) – ASIA

This is the first energy futures exchange for the Middle East The main trade is the Oman oil futures contract.

• Zhengzhou Commodity Exchange (ZCE) – ASIA

This is the futures exchange in commodities like agriculture and chemicals located in China

• Multi Commodity Exchange (MCX) – ASIA

This is an independent commodity exchange based in Mumbai.

• Tokyo Commodity Exchange (TOCOM) – ASIA

It is a nonprofit organization. It regulates option and future contracts of all commodities.

• Singapore Exchange Limited (SGX) – ASIA

It offers equity index futures and options, interest rates options.

• Australian Securities Exchange (ASX) – Australia

It is an electronic exchange for trading in various commodities.

Commodity derivative trading in India commenced even before financial derivative trading. The first organized commodity trading centre in India, the Bombay Cotton Trade Association commenced its operations within a short span of time after establishment of the first international level exchange, the Chicago Board of Trade in 1848. There was active trading in many commodities, especially agricultural commodities. New exchanges were formed in due course and additions were made to trading commodities. After independence the Forward Market Commission was established to regulate the functions of derivative trading.

Policies in connection with commodity derivative trading had a lot of twists and turns. Critics were of the opinion that future trading actually led to widespread price fluctuation on account of unscrupulous speculation. Tougher restrictions were imposed and by 1960s, there was practically a ban on futures trading of commodities barring a couple or few. This situation continued upto 1980s. A slow change in policy regarding commodity futures was observed. The Government appointed various committees to come out with creative suggestions in connection with derivative trading. The era of LPG witnessed a thorough change in the policies regarding commodity future trading. The ban imposed was lifted and once again, active trading in commodity futures emerged. The initial years of the new millennium witnessed the emergence of National Level

Commodity exchanges which permitted trading in multiple commodities. Online trading platforms were established. Many new regional exchanges, mostly specializing in single commodities were established. Of course, the regulators imposed ban on some commodities like sugar in between, but as and when situations were under control, such ban was repealed. The Government felt that the regulator FMC lacked necessary zeal and powers but curtail the fluctuations and to tame the irregularities. Besides, the market witnessed large quantum of speculative activities and even illegal trading. As early as 2003, there were talks to unify the regulators. But the NSEL scam which witnessed payment default in the national Spot Exchange in 2013 prompted the finance ministry to bring the regulator of commodity markets under its control. As a result, the Forward Contract Regulation Act was repealed; SEBI took charge as the ultimate authority of commodity trading or in other words, Forward Market Commission was merged with SEBI in September 2015. SEBI established new commodity cells and separate divisions for the monitoring and regulation of commodity trading. In the budget speech of 2016-17, Finance Minister Sri Arun Jaitley announced that trading in new derivative instruments in commodities would be permitted by SEBI, subject to conditions. In June 2017, SEBI permitted Option Trading in commodity markets with an intention to deepen the market. Initially, trading would be permitted in one commodity which is in the top 5 list of trading based on turnover of last twelve months. The developments in Commodity Markets are presented in a timeline frame below:

• 1875: Bombay Cotton Trade Association, the first organized future exchange was established to trade in cotton contracts
• 1893: Bombay Cotton Exchange Limited, an independent institution was established following the unhappiness among the members and traders of Bombay Cotton Trade Association.
• 1900: Gujarat Vyapar Mandali was established for carrying out trade in oil seeds like castor, groundnut etc.
• 1913: Establishment of Wheat Future Market by Chamber of Commerce which later spread to various parts of Punjab and Uttar Pradesh.
• 1919: For trading in raw jute and jute goods, Calcutta Hessian Exchange Limited was established.
• 1920: Future trading commenced in gold and silver in Bombay and later it was spread to Kanpur, Jaipur etc.
• 1927: East India Jute Association was established to offer future contracts in raw jute.
• By the end of 1930s, there was trading in almost 300 commodities.
• 1945: Merger of Calcutta Hessian Exchange Limited and East India Jute Association to form East India Jute and Hessian Limited
• 1950 Shroff Committee was established for recommendation of regulations in connection with commodity futures.
• 1952 to 1954: Forward Contract Regulation Act was promulgated in 1952 and Forward Market Commission was established in 1953 to regulate commodity derivative trading. Rules were subsequently framed
• 1957: Indian Pepper and Spice Trade Association (IPSTA) was established at Kochi for trading in black pepper and other spice products.
• 1960s: Suspension in trading of select commodities was imposed.
• 1966: Dantwala Committee was formed to review the role of commodity future markets. Comprehensive ban on commodity future trading was imposed by the Government.
• 1980: Khusro Committee recommended re- introduction of commodity derivative trading.
• 1980s: Trading was permitted in some commodities like potato.
• 1993-94: Kabra Committee was established to give recommendations in the modus operandi of commodity derivatives following the changes in the economic policies. It recommended changes in the FCR Act and also introduction of trading in 17 commodities. The Government later allowed trading in 15 commodities.
• 1990 to 2000 Many regional exchanges (like National Board of Trade Limited, Indore, Rajadhani Oil and Oil Seeds limited, Delhi, Coffee Futures Exchange India Limited Bangalore, First Commodity Exchange of India, Kochi ) were established
• 2000: National Agricultural Policy was formulated based on the findings of the expert committee headed by Shankarlal Guru. The Government permitted commodity futures trading accordingly.
• 2002: The first National Level Exchange, National Multi-Commodity Exchange (NMCE) Limited was established.
• 2003: National Commodity and Derivative Exchanges Limited (NCDEX) and Multi Commodity Exchange Exchange Limited (MCX) were established as ANtional Exchanges. Electronic trading exchanges stated operation.
• 2006: 2008 National Spot Exchanges were established by NCDEX and MCX.
• 2007: Abhijith Sen Committee was established to examine the impact of futures trading on agricultural commodity prices.
• 2009: Indian Commodity Exchange Limited, the 4th National Level Exchange was established.
• 2010: ACE Commodities and Derivatives Exchange Limited, the fifth national level exchange was established.
• 2012: The sixth National Level exchange, Universal Commodity Exchange Limited was established.
• 2015: FCRA was repealed and FMC merged with SEBI. SEBI became the regulator of commodity derivative markets.
• 2017: Introduction of option trading in commodities on a prototype basis.