IGIDR-MCX workshop on institutional participation in commodity derivatives markets


20th June, 2017
IGIDR, Mumbai.

Commodity derivatives markets provide a platform for stakeholders to man- age risks arising from commodity price volatility. Such markets are improved by encouraging diverse participation. Diverse participation will a) provide depth and b) facilitate heterogeneous views and sources of information into a single marketplace.
In India, banks are the largest financial institutions but they are not allowed to participate either directly or indirectly in the commodity derivatives mar- ket. Section 8 of the Banking Regulation Act prohibits banks from "directly or indirectly dealing in buying or selling or bartering of good, except in con- nection with the realisation of security given to or held by it."
Despite the significant exposure that banks have to commodity price volatil- ity, they are barred from hedging against commodity price risk exposure of their portfolios. Non-participation of this major player is an important missing link in the evolution of the commodity markets in India.
The objective of this workshop is to bring together different stakeholders in- cluding financial intermediaries, end-user firms and regulators at a common platform to discuss how there can be an increased participation the tradi- tional financial intermediaries such as banks, insurance companies, pension funds and mutual funds.

Agenda

10:00 - 10:10 Introduction [presentation]
10:15 - 10:45 How financial institutions participate in commodity derivatives markets [presentation]

10:50 - 11:20 Intermediation between market and users [presentation]

11:25 - 11:55 Market making: risks of taking proprietary positions

12:00 - 12:30 Using derivatives to hedge portfolio risks (AND grow customer business) [presentation]
12:30 - 13:00 Market microstructure to manage market integrity [presentation]
13:00 - 14:00 Lunch
14:00 15:00 Panel: Policy and regulatory interventions to improve institutional participation in commodity derivatives markets