Workshop on institutional participation in commodity derivatives markets
20th June, 2017
Seanza Conference Hall, Indira Gandhi Institute of Development
Research, 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 |
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