Title: Declining trade interest in Indian commodity derivatives: a survey-based study on cardamom futures contract

Authors: A.N. Vijayakumar

Addresses: Department of Finance and Accounting, Indian Institute of Plantation Management Bangalore, India

Abstract: Agri-plantation commodity futures contracts provide an opportunity for transparent price discovery and hedging to market participants in the commodity ecosystem. In this endeavour, the market regulator of derivatives and the government has been taking several measures for improving trade volumes, market efficiency and to protect the interest of trade participants. However, commodity futures contract volumes at the Indian Commodity Exchange has been experiencing a consistent fall in trade. This paper focusing on high-value cardamom futures contracts explored reasons for declining trade interest and falling trade volumes. This study with survey and impact of the event finds revised quality norms for fresh deposits of cardamom at accredited warehouses, higher cost of testing quality, raise in margin rate resulted in declining trading interest amongst market participants. The study also recommends appropriate policy to recognise exchange specific commodity trade norms considering Spices Board's e-auction to benefit market participants. This would facilitate transparent and competitive price discovery and an opportunity for managing price risk through the hedging process.

Keywords: cardamom futures; quality norms; margin money; commodity exchange; trading interest.

DOI: 10.1504/GBER.2023.130012

Global Business and Economics Review, 2023 Vol.28 No.3, pp.333 - 346

Received: 28 Dec 2021
Accepted: 01 Apr 2022
Published online: 04 Apr 2023 *

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