Page 75 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Financial Institutions and Services

Notes 2. Speculating: Speculators are people who are prepared to bear risks in anticipation of
earning profits. Markets are granted liquidity by speculators and it is hard to conceive of
a futures market devoid of speculators.
3. Arbitrage: Arbitrage involves buying a commodity at a low price and instantly selling it
for a higher price in another market. Thus, traders can profit from arbitrage opportunities
occurring due to price differences between two exchanges.
4. Shifting of Risk: The minute a trader finalizes a deal and secures a price, he is no longer
concerned by unfavorable price shifts. For example, if a seller trades a specific contract for $
450 and soon after the price comes down to $440, there has been an unfavourable price shift
but the seller has made a profit of $10. At this point, the risk has been transferred to the buyer
of the contract. Speculators trade on commodities and derivatives by undertaking risks in
order to maximize profits.
5. Information: Exchanges produce huge volumes of data that are intensely scrutinized and
monitored by a wide cross-section of people as the data provides gainful insights about the
prevailing economic conditions.

List of Exchanges in India

1. Bhatinda Om & Oil Exchange Ltd., Batinda.
2. The Bombay Commodity Exchange Ltd., Mumbai
3. The Rajkot Seeds Oil & Bullion Merchants’ Association Ltd.

4. The Kanpur Commodity Exchange Ltd., Kanpur
5. The Meerut Agro Commodities Exchange Co. Ltd., Meerut
6. The Spices and Oilseeds Exchange Ltd.
7. Ahmedabad Commodity Exchange Ltd.

8. Vijay Beopar Chamber Ltd., Muzaffarnagar
9. India Pepper & Spice Trade Association, Kochi
10. Rajdhani Oils and Oilseeds Exchange Ltd., Delhi
11. National Board of Trade, Indore

12. The Chamber of Commerce, Hapur
13. The East India Cotton Association, Mumbai
14. The Central India Commercial Exchange Ltd., Gwalior
15. The East India Jute & Hessian Exchange Ltd.

16. First Commodity Exchange of India Ltd, Kochi
17. Bikaner Commodity Exchange Ltd., Bikaner
18. The Coffee Futures Exchange India Ltd, Bangalore
19. Esugarindia Limited

20. National Multi Commodity Exchange of India Limited
21. Surendranagar Cotton Oil & Oilseeds Association Ltd.
22. Multi Commodity Exchange of India Ltd.

70 LOVELY PROFESSIONAL UNIVERSITY