Time To Institutionalise Indian Commodity Markets Kishore Narne IMC - 22-Dec-2016

The path we desire Commodity derivatives to aid business risk management Be the critical part of the engine of growth Aid manufacturing and compete at global level Protect farmers / stockiests / traders Be the price maker in few commodities Access for investors to commodities as segment through expert fund managers to diversify their investments

Currently we are Majority participation from Retail Large and medium corporates hesitant to use domestic markets and going to international platforms SME struggling with knowledge gap Frequent disconnect of physical markets with ETD caused by manipulation due to narrower markets Accused of excess speculation causing volatility

How to get Genuine Hedgers? Liquidity Cost Transaction cost Impact cost Cost of Capital Opportunity Cost

In this journey “Money Manager” shall play a crucial role…

Why do we need a Money Manager? Channelise Investors money with discipline and accountability for performance Increase penetration as knowledge gap to be filled by expertise of fund managers Large pools of money(Funds) act as counter-balance to offset the price risk off-loaded by hedger and enhance their confidence This also prevents some players taking the markets for a ride Better reach and power for regulators to monitor small number of large funds rather than large number of scattered traders Better risk management at exchange and member level as markets become more organised

What’s there for investors Investors can still access the market passively by choosing the best fund or best fund manager to invest They will be able to truly diversify the portfolio with access to such funds Investors may access the physical markets through ‘hybrid’ funds which may chose to hold physical goods as well as futures They can benefit from trends in a basket of commodities, where as now most of them stick to very few commodities

What’s there for Gold - Industry ETFs offered “Long Only” option, in which the decision to enter and exit still remains with investor, which just follows price Govt. Gold bond scheme also offers “Long Only” option These schemes will still lock in the metal though it can be lent out For true and free market, active and large hedge funds opens the option for investors to quickly get in and get out of gold Without locking in physical metal, and would enable real price discovery in domestic markets “Options” along with the managed money will allow for complex structures and enable to removing any anomalies in the price discovery of gold

@kishorenarne Thank You