Types Of Contracts In .modities Markets Derivative Contract-puritans pride

Investing A derivative contract is an agreement whose value is derived from the value of an underlying asset; the underlying asset can be a .modity, precious metal, currency, bond, or stock. In general, examples of derivative instruments are forwards, futures, options and swaps/ spreads. Currently, the government allows only forwards and futures trading in India. Forward Trading Contract:This is an agreement between two parties to buy or sell a .modity at a predetermined moment in the future. Forward trading is a bilateral and non-standardised contract specification. Futures Trading Contract: This is a refined forward contract between two parties to buy or sell a .modity, but contract specification, quality values and other things are standardised. NTSD contract: The Non-Transferable Specific Delivery Contract is a bilateral agreement under which the terms of contract are customized and the performance of the contract is done by giving specific delivery of goods. The rights or liabilities under this contract cannot be transferred by transferring the delivery order (CHK) through railway receipts or warehouse receipts. TSSD contract: The Transferable Specific Delivery contract is a customised agreement, where, unlike known transferable specific delivery contracts, the right or liabilities under the delivery order, railway receipt, bill of lading, warehouse receipts or any other documents of title to the goods, are transferable. The contract is performed by delivery of goods by first seller to the last buyer. The demand and supply scenario are the prime drivers of the price movement of the .modity. A producer, to hedge his future losses due to a price decline in his product, uses the .modity futures market. It provides an efficient and transparent price discovery mechanism. Futures trading is purely a hedging instrument and should (CHK) be looked upon as a profit-making one. .modity exchanges in India will contribute significantly towards the development of the Indian economy as a whole. The government of India is considering reforming the futures market in India by permitting options trading, weather derivatives, and participation by banks, mutual funds and other financial institutions. About the Author: 相关的主题文章: