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

3. 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

4. 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

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

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

7. 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

8. 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

9. 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

10. @kishorenarne
Thank You