ANALYSIS OF INVESTORS AVENUES IN COMMODITY MARKET

Submitted in partial fulfilment of the requirements of the two year

Post Graduate Programme (PGP).

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 EXECUTIVE SUMMARY

INDIABULLS SECURITIES LTD. is a brokerage house which deals in purchase and

sales of Financial securities on behalf of there clients. This project elaborates on
“Analysis of investors avenues in commodity market”.

The company was promoted by three engineers named “SAMEER GEHLAUT, RAJIV
RATTAN, SAURABH MITTAL”, from IIT Delhi.

The project was undertaken through regular visits to the branch. Communicating with
clients, solving their quarries, executing their transaction etc. were some of the main
feature of the project. Basically the project revolves around to analyses that how to invest
in the commodities so that a customer could get the sufficient return on his investment.
Also this project reveals the norms and conditions of the broking house so that a client
could easily trade in the market. The project depicts the various settlements and
obligations while trading such as fund settlement, margin money, shortage of funds,
payment modes, and delivery of goods and also in this project lot size if different
commodities are listed. Apart from it all the walking clients were deeply observed while
they came into the branch and assisted me in learning there work profile.

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TABLE OF CONTENTS

1. ACKNOWLEDGEMENT

2. COMPANY PROFILE

3. EXECUTIVE SUMMARY

4. INVESTMENT PLANNING

5. OBJECTIVE

6. LITERATURE REVIEW

7. RESEARCH AND METHODOLOGY

8. RESULTS AND ANALYSIS

9. INDIABULLS INTRODUCTION

10. COMPANY BACKGROUND

11. INDIABULLS SECURITIES LTD.

12. INDIABULLS COMMODITIES LTD.

13. IMPORTANT PRODUCTS OFFERED BY INDIABULLS

14. INDIABULLS DETAILED ANALYSIS ON COMMODITY

15. TECHNOLOGY

16. KEY BUSINESS STRATEGIES

17. INVESTORS AVENUES IN COMMODITY MARKET

18. MARGIN REPORT

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19. TRADING SYSTEM

20. SETTLEMENT

21. CONCLUSION

22. REFERENCES

COMPANY PROFILE
Indiabulls is India’s leading Financial Services and Real Estate company having over 640
branches all over India. Indiabulls serves the financial needs of more than 4,50,000
customers with its wide range of financial services and products from securities,
derivatives trading, depositary services, research & advisory services, consumer secured
& unsecured credit, loan against shares and mortgage & housing finance. With around
4000 Relationship Managers, Indiabulls helps its clients to satisfy their customized
financial goals. Indiabulls through its group companies has entered Indian Real Estate
business in 2005. It is currently evaluating several large-scale projects worth several
hundred million dollars.

“Indiabulls Financial Services Ltd is listed on the National Stock Exchange, Bombay
Stock Exchange and Luxembourg Stock Exchange. The market capitalization of
Indiabulls is around USD 8,300 million (31st December, 2009). Consolidated net worth
of the group is around USD 1005 million (31st December, 2009). Indiabulls and its group
companies have attracted more than USD 800 million of equity capital in Foreign Direct
Investment (FDI) since March 2000. Some of the large shareholders of Indiabulls are the

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largest financial institutions of the world such as Fidelity Funds, Goldman Sachs, Merrill
Lynch, Morgan Stanley and Farallon Capital.

Business of the company has grown in leaps and bounds since its inception. Revenue of
the company grew at a CAGR of 159% from FY03 to FY07. During the same period,
profits of the company grew at a CAGR of 184%. Indiabulls became the first company to
bring FDI in Indian Real Estate through a JV with Farallon Capital Management LLC, a
respected US based investment firm. Indiabulls has demonstrated deep understanding and
commitment to Indian Real Estate market by winning competitive bids for landmark
properties in Mumbai and Delhi.”

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 INVESTMENT PLANNING
Investment planning is an alien concept for the Indian populace. For a country which till
now was worried about making ends meet this emerging trend is definitely a new
experience. But, the truth is that if only they would have been introduced to the Art of
Managing Money, life could have been so much easier. Most of us spend more than half
of our lives working and saving because money is important, in fact crucial. However,
most of us spend almost no time planning to make that hard-earned money work more
effectively for us. So, how do one plan for his financial life?

Financial planning is nothing but an assessment of one’s goals and the steps one must
take to help make them a reality. Is he willing to retire with a sound lump sum amount or
does one want a steady monthly income. Is son’s education or daughters' marriage
worrying? The key is to figure out goals. Where is your money going? The most
important thing is that one should where your money is going. Zero on your monthly and
annual expenses Knowledge is power. It is common knowledge that money has to be
invested wisely. It takes years to understand the art of investing. To start with, one should
take investment decisions with as many facts as he can assimilate. But, understand that no
one can ever know everything. Learning to live with the anxiety of the unknown is part of
investing. Investing isn't gambling or speculation; it's about taking reasonable risks to
reap steady rewards. Investing is a method of purchasing assets in order to gain profit in
the form of reasonably predictable income (dividends, interest, or rentals) and
appreciation over the long term.

Why should one invest?

Simply put, one should invest so that his money grows and shields him against rising
inflation. The rate of return on investments should be greater than the rate of inflation,
leaving him with a nice surplus over a period of time.

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Whether money is invested in stocks, bonds, mutual funds or certificates of deposit (CD)
or any other assets, the end result is to create wealth for retirement, marriage, college
fees, vacations, better standard of living or to just pass on the money to the next
generation. Also, it's exciting to review investment returns and to see how they are
accumulating at a faster rate than salary or any other source of regular income.

When to Invest?
The sooner the better. By investing into the market right away allows investments more
time to grow, whereby the concept of compounding interest swells income by
accumulating earnings and dividends. Considering the unpredictability of the markets,
research and history indicates these three golden rules for all investors.

1. Invest early

2. Invest regularly

3. Invest for long term and not short term.

Trust in the power of compounding is growth via reinvestment of returns earned on

savings. Compounding has a snowballing effect because one earns income not only on
the original investment but also on the reinvestment of returns accumulated over the
years.

The power of compounding is one of the most compelling reasons for investing as soon
as possible. The earlier one starts investing and continues to do so consistently the more
money will be made. The longer the money remains invested and the higher the interest
rates, the faster the money will grow. There is always a first time for everything so also
for investing. To invest, one needs capital free of any obligation. If he is not in the habit
of saving sufficient amount every month, then he is not ready for investing.

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How much money is needed to invest?
There is no statutory amount that an investor needs to invest in order to generate adequate
returns from his savings. The amount that should be invest will eventually depend on
factors such as:

• Investor’s risk profile

• Time horizon of investment
• Savings made

The investing options are many, to name a few :

• Bonds
• Mutual funds
• Fixed deposits
• Stocks
• Metals
• Others

Where Can I Invest?

The possible avenues for investment can be divided into following categories:

1. Fixed Income Instruments

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This product class includes options such as Fixed Deposits, Debentures, Bonds,
Preference shares etc. These investments are relatively safer but limited upside on
returns. In analysis of project I found that generally investment trends have started
moving against these investments because of returns they generate. It has been observed
that such instrument generate a return in range of 4% - 9% and given the current level of
inflation of about 11.91% Actually people end up having a negative return on their
investment.

2. Foreign Currency Investments

Wherever allowed by government regulations, investors particularly in developing
countries will prefer to keep their assets in foreign currency. Hard currencies like the US
dollar or Pound or Euro are relatively stable. The risk of currency depreciation in case of
economic / political turmoil is high. This was evident when all major South East Asian
currencies collapsed last year. People at individual level or so called retail level do not
make investment in these instruments as the threshold limit itself is very high for
investing in these instruments. Apart for it requires far more in-depth knowledge about
world market, inflation, interest rates to make investment in these instruments. During the
project I have learned that it is better for retail or individual investor to remain away from
investing in these instruments.

3. Equities
However these investments do not for part of my study but because of its close relation
with stock market I have got fair enough insight in to these instrument as well. Options
available are secondary market (buying and selling shares in the stock exchanges) or the
primary market (IPOs). Generally classified as a high risk high return asset. But I
personally do not consider them high risk investment yes one need to be knowledgeable
enough to make money through this investment

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4. Commodities
Investing in commodities on a large scale is done typically by a trader or speculators,
who generally are skilled. Normally in commodities high risk investors would invest for
high returns in a short period. A proxy for this is the way retail households stock up
commodities in anticipation of price increase, such as stocking sugar or wheat
requirement for the full year. My project revolves around investment in commodities and
how profit is earned through investment in it.

5. Art/ Antiques, Etc

Art has proved to be an important investment avenue, particularly for the rich and
wealthy. However, one has to be an expert in evaluating the value of art. Wrong decisions
might just leave a piece of paper hanging on your wall (not to mention the hole in your
pocket). Investment in paintings is illiquid and has a long gestation period, entails high
risk but with high rewards too. Other collector items can be stamps, antiques, cards,
signatures, letters, etc. In general, it is difficult for the common man to explore
investment opportunities in this segment. I have kept them out of my study.

6. Mutual Funds
Mutual funds are surrogate direct investment in debt or equity. In effect, any mutual fund
is an effective retail (can be institutional also) fund accumulator. Mutual funds can be
classified on the basis of their investment strategy and avenues. Equity funds invest in
shares while debt funds invest in debentures, and other debt instruments. A balanced fund
tries to maintain an optimum balance of debt and equity. While the mutual fund manger
is supposed to have higher expertise in managing portfolios and should therefore yield
higher return but in practice most mutual funds have under performed the indices, ie.
have under performed the market averages. One has to carefully select a mutual fund
based on their track record and also the right kind of scheme for the investors risk profile
and other objectives.

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7. Real Estate
This offers a limited option to investors as in India most people buy a house to live in.
Only the very rich buy property as an investment. In the early 90s, property prices rose
sharply, creating a fancy for real estate. In the last 3 years, the real estate market has
taken a real beating, which coincided with the economic slowdown. Real estate is very
illiquid investment option.

OBJECTIVE
The objectives of the study as regards the final project are as follows:

• To know the attitude & preference of the general investors in the Indian

capital market.

• To analyze the various pros and cons in the capital market.

• To get an insight to the working / operations of an online brokerage

firm

• To understand the online stock operations.

• How far Indian capital market stands in the world financial system.

• Last but not the least to take the overall view of Indian capital market.

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 LITERATURE REVIEW

The work is a pure applied part of my 2 months curriculum. It has been a purely practical
exposure to the corporate sector. I must say that being an MBA student, aspiring to take
specialization in the field of Marketing, I was quite familiar with the business
environment theory after completing 1 year of my studies.

There is no doubt about the fact that theoretical knowledge acquired by a student during
the pursuance of his/ her MBA lays down a foundation with the help of which the
student, in consideration, can expect to have the widest exposure of the reality show of
the corporate sector. But, one should not take it for granted that the so-called theoretical
concepts can be applied to the business environment in totality. That is to say that there,
actually, is a difference between the theoretical and practical environment of the
corporate world. Part A of the story is, that one has to take into consideration, the
feasibility of a specific theoretical concept before one is to apply the same in the typical
or complex business situation. Decisions taken out of thin air, in an ad-hoc manner, may
spell a disaster for the organization as a whole. The other part of the story is that if one
has applied a theoretical concept, in the light of its feasibility and after effective
consideration of the Cost and Benefit Analysis, the same can prove to be very fruitful for
the organization.

There’s a popular management theory, which is very much prominent in the corporate
world in the context of the prevailing competitive business environment. It is the theory
of “Management by exception”. It says that if one tries to control everything, one may

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end up controlling nothing ne of the important role of a modern finance manager is, to
control and thereby reduce the cost incurred by an organization. Thus, modern finance
managers do not, as a matter of fact, try to control each and every cost unit. They follow
the principle of “Management by exceptions” whereby they try to control and reduce
the cost of only those cost units where massive amount is spent. This is due to the fact
that they are having a common belief and perception. That is, if you try to reduce the cost
associated to each and every cost unit, neither you would not be able to control the same,
nor you would be in a position to reduce the cost.

Thus, to conclude, I would say that there is a slight difference between theoretical and
practical realities. But, one must understand that, in order to rule the corporate world it is
worthwhile to have the theoretical knowledge because, it is the theoretical knowledge
that lays down the foundation for the success of a modern business manager.

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 RESEARCH AND METHODOLOGY
INVESTMENT

AVENUES IN THE

COMMODITY MARKETAND THEIR PRODUCTS ANALYSIS

RESEARCH METHODOLOGY:

Market surveys have been conducted to know the scenario of market regarding measures
to increase retail investor’s confidence in Indian commodity market. Project study is done
with a systematic approach. So while doing a research I have followed certain steps,
which are as follows: -

COLLECTION OF BACKGROUND INFORMATION

OBJECTIVES

DEVELOPING AND VALIDATING RESEARCH

COLLECTING THE INFORMATION

ANALYSING THE INFORMATION

PRESENTING THE FINDINGS

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DESIGNING A RESEARCH PLAN

For the purpose of getting proper information and then further analysis the research
plan was efficiently and effectively designed. Various decisions were taken related to

 Data sources

 Research approaches

 Research instruments

• DATA SOURCES:
There are two types of sources for the collection of data

 Primary data

 Secondary data

Primary data
Primary data have been collected through employees of CP Branch of INDIABULLS
SECURITIES LTD.(where my training has been conducted),by sharing there knowledge
and learning.

Secondary data
Secondary data has been collected through Internet, books, journals and newspapers, etc.

• RESEARCH APPROACHES

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Conducting a research a variety of approaches are used :-

Observation

This involves watching how people react to commodity market’s fluctuation and how

satisfied are they with the returns on the various investments they have made.

• RESEARCH INSTRUMENTS

Verbal Interaction

Practically looking at there work

RESULTS AND ANALYSIS

COMPANY PROFILE
VISION AND MISSION OF INDIABULLS.

VISION

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 • To be the largest financial services organization in Indian retail market and
become a one stop shop for all non-banking financial products and services for
the retail customer.

MISSION
• Rapidly increase the number of our client relationships to clear market
leader
• Provide our clients with a very broad array of product offering

INDIABULLS INTRODUCTION
It took Uday Kotak 25 years to do what Indiabulls has achieved in 4 years…here’s the
business history of an empire business built from scratch and moving on to become a
force to reckon with.

The Company was promoted by three engineers from IIT Delhi, and has attracted more
than Rs.700 million as investments from venture capital, private equity and institutional
investors such as LNM India Internet Ventures Ltd., Transatlantic Corporation Ltd.,
Farallon Capital Partners, L.P, R R Capital Partners L.P, and Infinity Technology Trustee
Pvt. Ltd. and has developed significant relationships with large commercial banks such as
Citibank, HDFC Bank, Union Bank, ICICI Bank, ABN Ambro Bank, Standard Chartered
Bank, Lord Krishna Bank and IL&FS.

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The Company and its subsidiaries have facilities from the above-mentioned banks and
financial institutions aggregating to Rs. 1765 million. The company headquarters are co-
located in Mumbai and Delhi, allowing it to access the two most important regions for
Indian financial markets, the Western region including Mumbai, rest of Maharashtra and
Gujarat; and the Northern region, including the National Capital Territory of Delhi,
nearby cities, parts of Haryana, Uttar Pradesh and Punjab; and access the highly skilled
and educated workforce in these cities. The Marketing and Sales efforts are
headquartered out of Mumbai, with a regional headquarter in Delhi; and its back office,
risk management, internal finances etc. are headquartered out of Delhi, allowing the
Company to scale these processes efficiently for the nationwide network.

COMPANY BACKGROUND
Indiabulls Financial Services Limited was established in the year 2000. The company
started its operation with a team of 15 in a single office. Today, the company has become
the distributor of various financial products and operates from 82 offices in 55 cities to
serve a client base of around 1,80,000. The base of online clients has expanded from just
21680 in March 2004 to 100000 clients as of March 2005. This provides an excellent
base for cross-selling third party products like mutual funds and insurance. IFSL also sees
vast potential in the distribution of consumer durable and home loans, which it has
introduced recently.

WHY INDIABULLS? MAKING YOUR INVESTMENT EASY!

Indiabulls to you as a Technology Oriented Financial Services Company offering

Integrated Equity analysis, Stock Trading, Depositary & Insurance services, Margin
Trading facilities backed by real time risk management systems and fast trade execution.

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Indiabulls also provides its clients with valuable real-time information, access to breaking
news and market happenings, along with in-depth and insightful analysis. The
organization has an established presence in 62 cities through its 70 branch offices and has
a base of over 35000 clients. Ranked amongst the top 5 retail brokers in the country with
average daily trading volumes of over Rs. 600 crores in the current markets and holds
over Rs. 150 crores of assets in its own depository services.

SOME OF THE UNIQUE FEATURES ARE:

• Trading via branch network, telephones and Internet account. That is Both online and

offline (by telephone).

• Customized products for lending against shares

• Automated Extended Margin Trading Facility

• Integrated Trading and Depositary Account

• Technology transforming desktop into ODIN like terminal for Internet trading

• Commodity Research Department, which studies the market and provides

information.

• Up-to-date news, data and analysis via Indiabulls.com

• Contract notes on daily bases through post

• Customized Insurance services.

SUBSIDIARIES

1. Indiabulls Securities Ltd.

2. Indiabulls Insurance Advisors Pvt. Ltd

3. Indiabulls Equities Pvt. Ltd.

4. Indiabulls commodities Pvt. Ltd.(my project topic)

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INDIABULLS SECURITIES LTD.
Indiabulls Securities limited was incorporated as GPF Securities Private Limited on June
9, 1995. The name of the company was changed to Orbis Securities Private Limited on
December 15, 1995 to change the profile of the company and subsequently due to the
conversion of the company into a public limited company; the name was further changed
to Orbis Securities Limited on January 5’ 2004. The name of the company was again
changed to Indiabulls Securities Limited on February 16, 2004 so as to capitalize on the
brand image of the term “Indiabulls” in the company name. ISL is a corporate member of
capital market &derivative segment of The National Stock Exchange of India Ltd. At
present, ISL accounts for approximately 3% of the total daily turnover of the Exchange
with 32,359-client relationship and 70 branches spread across the country as of April 30,
2004.

INDIABULLS INSURANCE ADVISORS PVT. LTD

Indiabulls Insurance Advisors Pvt. Ltd. was incorporated as Orbis Technologies Private
Limited on February 18, 2002 and the name of the company was changed to Indiabulls
Insurance Advisors Pvt. Ltd. on February 9, 2004 due to change in the main objects of
the company. Indiabulls Insurance Advisors Pvt. Ltd. is a corporate agent for life
insurance with Birla Sunlife Insurance Company Ltd.

INDIABULLS COMMODITIES PVT. LTD.

Indiabulls Commodities Pvt. Ltd. was incorporated on October 30, 2003 and is a member
of National Commodities Derivatives Exchange (NCDEX). The NSE for derivatives
trading on commodities in India has promoted NCDEX. Being a member of NCDEX,
ICPL will function as an intermediary for commodity’s derivatives. The Company
commenced its activities from March 30, 2004.

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INDIABULLS EQUITIES PVT. LTD.
Indiabulls Equity Analysis provides the user with a basic company background that
includes:

• Services and products offered

• Client profile
• Core competency
• Achievements and its relative position (market share) in the industry.

SOME IMPORTANT PRODUCTS AND SERVICES

OFFERED BY INDIABULLS ARE
1. Equities & Derivatives

2. Indiabulls Equity Analysis

3. Indiabulls commodities Analysis

4. Depository Services

5. Insurance

6. Personal Loans

INDIABULLS OFFERS
• Broker assisted trade execution,
• Automated online investing
• Access to all IPO's.(in equities)
• Online trading

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Indiabulls offers the purchase and sale of securities, which includes Equity, Derivatives
and Commodities Instruments listed on National Stock Exchange of India Ltd (NSEIL),
The Stock Exchange, Mumbai (BSE) and NCDEX.

INDIABULLS COMMODITIES ANALYSIS

Indiabulls Commodities Analysis, which helps the investor in building and maintaining
the ideal portfolio.

Indiabulls Commodities Private Limited (ICPL), a 100% subsidiary of Indiabulls

Securities Limited, offers commodity brokerage services to its customers. ICPL is a
registered Trading-cum-Clearing member of Multi Commodity Exchange of India Ltd.
(MCX) and National Commodity and Derivatives Exchange Ltd (NCDEX). These two
Commodity Exchanges have shown a phenomenal growth in trading volumes. Significant
Trading and Arbitrage opportunities exist for informed players in the futures market.

ICPL is the right partner for you if you are keen on tapping opportunities being presented
by this nascent commodities futures market. We offer a clearly differentiated product to
our clients with a strong focus on research. Our commodities research team has a rich
research experience in the commodities markets. The specialized services provided by
our research team include daily intraday reports, reports on Agri-commodities & Metals,
weekly & medium term market outlook and arbitrage strategies.

Our retail branch network is one of the largest retail branch networks in the private
financial services sector and provides our customers with an unmatched distribution and
service capability. Our flagship Indiabulls network, spread over more than 250 Indiabulls
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offices in 80 cities, offers real-time prices, detailed data and news, intelligent analytics
and electronic trading capabilities, right at you fingertips.

ICPL offers dedicated Relationship Manager to cater to all your trading related
requirements. To provide the highest possible quality of service, we provide full access to
all our products and services through multiple channels.

Commodity Online

NEW DELHI: Leading financial services company Indiabulls Financial Services will
bring down its equity stake in the new commodity exchange that the company is
launching in collaboration with public sector MMTC, India's largest trading enterprise.

Early this week, the government gave formal approval to the Indiabulls-MMTC
commodity exchange, the fourth national commodity bourse. Currently Indiabulls has 74
percent equity stake in the new exchange venture whereas MMTC holds the remaining 26
percent.
But rules from the apex commodities trading regulator Forward Markets Commission
stipulate that a single entity can not hold more than 40 percent equity stake in a
commodity exchange. "We will bring down our stake in the exchange as per the FMC
guidelines. We are talking to various players on this," a senior Indiabulls official said.
Indiabulls is said to be talking to a number of Indian and foreign financial groups in an
attempt to divest its 34 percent stake in the exchange venture.
Indiabulls-MMTC combine is the latest to join the arena which already has 22 exchanges
including three online national exchanges--MCX, NCDEX and NMCE. Recently, the
Bombay Stock Exchange had taken a 26 percent sttek in the Ahmedabad-based NMCE

WHAT IS INDIABULLS COMMODITY ANALYSIS?

• An Commodity Rating approach is objective and not so difficult to understand

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• Indiabulls Commodity Analysis provides clients with an objective rating system for

number of commodities.

• An unbiased approach to help in deciding which commodity to buy and/or sell.

Snapshot
This feature of Commodities Analysis provides its clients in short and precise the
company’s background, commodity price, contract details. Following are the parameters:

1. Overview

2. Company background

3. Commodities report

4. Contact details

1. OVERVIEW:
Contains precise information about the commodities, current price, Highest trade
price, lowest trade price, volume trade, etc.

2. COMPANY BACKGROUND /DETAILS:

Indiabulls commodity Analysis provides the user with a basic company background that
includes:

• Services and products offered

• Client profile

• Core competency

• Achievements and its relative position (market share) in the industry.

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 3. COMMODITIES REPORT
Contain online reports for customers.

4. CONTRACT DETAILS
Gives contracts details to traders through “Contract note”.

Fundamentals
• Annual income sheet

• Quarterly income sheet

• 4 years balance sheet

• Charts

ANNUAL INCOME SHEET

Historical data which includes parameters like operating expenses, excise, raw material
consumed, total interest, Gross profit, net depreciation, total taxation, net profit and loss
for the past 2 yrs and their percentage change. Also, 1 yr estimated financials with the %
changes are formulated.

QUARTERLY INCOME SHEET

Historical data for the past 4 quarters such as recurring income, Adjusted PBDIT,
Financial express, Depreciation, tax charges, Adjusted PAT.

4 YEARS BALANCE SHEET:

Fund flow statements covering the past 4 years.

Charts:
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Stock performance data compared with the index.

DETAILED ANALYSIS
• Key highlights
• Industry scenario
• Operational performance

KEY HIGHLIGHTS:
This showcases the company’s performance dealing with:

 Recent announcements in the industry

 Achievements of the company
 Mergers & acquisitions
 Venture agreements

INDUSTRY SCENARIO
This deals with the current industry scenario and the company’s relative position,
market share, outlook, laws, economic reforms and provisions undertaken and growth
rate, current performance and future targets.

COMPANY SPECIFIC INFORMATION

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 Covers operational and financial performance, expansions, future plans and cautions.

REGISTRATION PROCESS
1. Call Help Desk/Relationship Managers/Register Online.
2. Relationship Managers are told of the lead.
3. Explanation of the product by the Relationship Managers and Collection of
Cheques and Undertakings.
4. All the Cheques and Undertakings are sent to Delhi.
5. Password reaches the client by courier.
6. The Clock starts 7 days after the Password is dispatched to the client.

INSURANCE
Indiabulls gives you the opportunity to avail Birla Sunlife Life Insurance and TATA AIG
Life Insurance through the Indiabulls network of 750 Relationship Managers over 135
locations nationwide. Which means you can take care of life, while taking care of
business.

Personal Loans
Offers the shortest route to a loan with minimum paperwork and procedures. With
Easymoney, you can avail of easy loans for a minimum of Rs.10, 000 to a maximum
amount of Rs.1, 00,000.

Features of Easy money are

• Flexible loan tenor of up to 4 years (i.e. 1 month to 48 months).

• Loans available from a minimum of Rs.10,000 up to a maximum of Rs.100,000.

• Easy monthly repayment through equated monthly installments (EMI).

• Med claim Insurance bundled with every loan you avail.

• Easy documentation and quick disbursal.

You take today and you can pay it tomorrow with no penalties

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 DOCUMENTS REQUIRED FOR TRADING ACCOUNT
• 2-passport size photograph.

• Photocopy of Income Tax Permanent Account Number (PAN) Card - If you do not

have a PAN, then you would be required to give a declaration to that effect and fill

form 60.

• Photograph

IDENTITY PROOF - PHOTOCOPY OF ANY OF THE FOLLOWING:

• Passport

• PAN Card

• Voter ID

• Driving License

• Ration Card

• Address Proof - Photocopy of any one of Driving License / Passport/Ration

Card/Voter Card/ Bank Statement.

POST REGISTRATION SERVICES:

• Deliver and receive cheques and securities
• Obtain market information
• Place orders
• Delivery of goods

Features
• Indiabulls is India's leading retail financial services company with 41 locations spread
across 37 cities.
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• Over 450 Client Relationship Managers are dedicated to serving your unique needs.
• Is complemented by our knowledgeable and customer focused Relationship
Managers.
• Provides our clients with real-time service & 24/7 accesses to all information and
products.
• Indiabulls offers a full range of financial services and products ranging from Equities
to Insurance to enhance your wealth and hence, achieve your financial goals.

Features of Power Indiabulls (It is a unique offering by the company which helps an
investor to trade online).
The features include:

• Live Streaming Quotes

• Fast Order Entry
• Tic by Tic Live Charts
• Technical Analysis
• Live News and Alerts
• Extensive Reports for Real-time Accounting

BENEFITS OF TRADING WITH INDIABULLS

• Personal relationship Manager - 24/7.
• Most competitive brokerage and DP charges.
• Only one time account opening charges and no annual maintenance charges.
• Margin trading of 4 times the cash deposited for delivery based trade.
• Margin trading of 8 times the cash deposited for intra-day based trade.
• Margin trading of 2 times the approved category based shares deposited for delivery-
based trade.
• Margin trading of 4 times the approved category based shares deposited for delivery-
based trade.

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• Buy today Sell tomorrow for all securities facility.

CORE VALUES – WHAT DRIVES THE ORGANIZATION

Indiabulls has a performance driven culture where the core value, which drives the
organization, is its profitability-oriented culture. Every employee is an entrepreneur and
is motivated in his own right, trying to make profits for himself. The major core
philosophy of the company has been to provide the best service to the customer.

TECHNOLOGY
IFSL’s ongoing investment in technology is a key element in expanding their product and
service offerings, enhancing their delivery systems, providing fast and consistent client
service, reducing processing costs, and facilitating their ability to handle significant
increases in client activity without a corresponding rise in risk and staffing levels.
Deployment of cutting edge technology and innovation in product development has had a
key role to play in the success of the organization.

The highlights of the company’s technology include:

• In-house technology team consisting largely of engineering graduates with

detailed understanding of the trading and internal systems
• Low response time and high flexibility to introduce new features/ products at
minimal costs

30
 • Risk Management System is built around real time technology requiring minimal
human intervention
• National Stock Exchange approved CTCL product developed by their technology
team enabling them to provide the product to large user base.

IFSL has computer network connecting all of the offices and centralized service center to
support its multi-channel delivery systems, as well as other applications such as risk
management. IFSL maintain backup and recovery functions to enhance the reliability of
the system and Integrity of data. This includes logging of all critical files intra day,
duplication and storage of all critical data every twenty-four hours and maintenance of
facilities for backup and communications. It also includes the maintenance and periodic
testing of a disaster recovery plan.

INTERNET BASED COMMODITY TRADING SYSTEM

ISL’s Internet Based Commodity trading system handles over 22,871 clients spread all
across the country. At the core of the Internet based share trading system is an in-house
developed application that interfaces with the MCX and NCDEX and allows users to
carry out commodity transactions online. This application has following features:

• Supports for future (commodity) Market

• Common Integrated Risk Management for market segments
• A feature rich browser based terminal
• Desktop based installable terminal for the highly active trader
• Electronic Payment Interface to participating Retail Bank
• India bulls Equity Research & Analysis
• Support for Non-Resident Indian Customers
• Multiple Tick-by-Tick Charts and Technical Analysis
• Streaming Quotes
• Multiple and fully customizable market watches and multiple order books.

31
 The application is an N-tier application with robust design and architecture made for
scalability, reliability and high performance.
The main components of the Internet Based Trading application are explained below:

1. Exchange Connector – The Exchange connector is a software component

that interfaces with the exchange for the purpose of sending Order requests and receiving
back order and trade confirmations.

2. Internet Trading Front-end - The Internet Trading front end has been
developed on the Java platform with the presentation layer in Java Server Pages and the
logic residing in Java classes. Currently it is being run on the Iplanet Web Server from
Netscape. The Internet trading front end uses a proprietary methodology of database
connection pooling to achieve better performance.

3. Risk Management Module – The core of the application is the application

server and risk management module, which validates all orders placed by customers
against the limits available to them as per our risk management logic. This module
accepts and forwards to the exchange all orders that pass the risk management criteria
while rejecting any that do not meet them.
4. Internet Interface – The Internet interface is an interface to web server using
advanced Inter Process Communication using DBMS Pipes and Message Queues. This
interface is also runs on Tru-64 Unix.
5. CTCL Interface – The CTCL interface is the component interface to the
Power Indiabulls Group Server, which is also their CTCL software (approved by NSE).
6. Power India bulls Group Server – This is a server side component of the
Power Indiabulls Group Dealer Terminals. This multi-threaded component is responsible
for all communication with the Power Indiabulls Group terminals given out to active
trading clients. It is completely written in JAVA and is portable to any Java supporting
operating system. This component has the following advanced features:

32
 • Connection management with reconnects functionality
• Compression of market data for optimized bandwidth utilization
• Streaming of data to the terminals
• Advanced Database Connection Pooling through proprietary logic for
performance
• In built security features against D-Dos attacks
• Bandwidth throttling for better performance on slow Internet connections
at client end.

7. Power Indiabulls Terminal – The Power Indiabulls Terminal is a terminal

ideally suited for the active trader. This software gets installed on the client
machine and is similar to a Dealer Terminal over the Internet. The terminal has a
lot of features that makes it extremely usable from the point of view of a trader
who is active in the market.

Some of the product features are

• Integrated market watches for commodities
• Multiple tick by tick charting
• Advanced Technical Analysis
• Single key stroke order entry
• Easy to use risk management reports
• Secured Socket Layer connectivity with server
• Two second order confirmation turnaround time even during peak hours.

COMPETITIVE STRENGTHS TO BE THE MARKET LEADER

What keeps Indiabulls ahead of the competition is the competitive edge that it has
over other players in the market.

 Diverse Branch Network

33
  Bouquet of financial products and services
 Advanced technology team that delivers market leading product
innovation
 Strong sales and marketing teams with continuous reinvestment and
training
 Strong cross selling opportunities
 Strong and experienced promoters
 Leading product innovation and marketing strategies
 Well capitalized player, with strong banking relationships and credit
ratings
 Ability to combine people and technology in unique ways
 Strong market presence and increased market share leading to a virtuous
cycle of growth and profitability.

ETHICAL VALUES

Indiabulls has a performance driven culture where the core value, which drives
the organization, is its profitability-oriented culture. Every employee is an entrepreneur in
his own right, trying to make profits for himself as well as the Company

CORE COMPETENCY

The company’s core competency is its unique business model – the model of
relationship managers by which those who trade through the internet also gets the human
touch. The aggressive profit sharing model (with the employees) that it pursues is another
major high of the core competency.

34
] KEY BUSINESS STRATEGIES
Their focus on the client has allowed the company to offer a range of services that have
changed the investing landscape and created a new model of financial services that melds
people and technology to provide an integrated human assisted technology interface
service for investors who range from self-directed full-time active investor to those who
prefer to deal with through a marketing associate in smaller towns and cities.

THEIR KEY STRATEGIES INCLUDE:

 Defend and maintain our differentiation as the firm that delivers ethical and useful
services
 Build and expand our “investing insight” through our product offerings such as
commodity analysis
 Give clients new levels of choice tailored to their desire for help, tools for investing
their assets, their willingness to pay for additional services and the level of business
they can do with us
 Provide clients with tools, relationship managers and choices that support their
desired investment outcomes

35
They have developed a client specific approach as a core element of their business
strategy and are constantly focusing on acquiring new clients and expanding their
customer base. They believe that the strong secular growth of the Indian financial
markets, due to increased household penetration of financial assets; increasing liquidity
and market capitalization of Indian markets, led by the listing of many public sector
entities; and the increasing affluence of Indian households and savers provides an
impetus to our growth perspective.

SOCIAL INITIATIVES

Does the business house think of the society and the nation or are they basically
concerned about profit generation only.

The company as such has not undertaken any major social initiative - they did
contribute to the Tsunami Relief Fund (2 days salary of every employee). The
company as such does not believe in doing something different from their business;
they believe that they could contribute to the society by doing what they are best at
– making profits for the stakeholders and also employing more people.

36
 INVESTORS AVENUES IN
COMMODITY MARKET
What are “commodities”?

A commodity is anything for which there is demand, but which is supplied without
qualitative differentiation across a given market.
"Commodity trading" is often used to describe all types of futures markets, commodities
are more specifically known as physical assets. They include natural resources, chemicals
and physical products one can touch, taste, smell, grow, mine, consume or deliver. gold,
crude oil ,pulses

In other words, we can say, Commodities are agreements to buy and sell virtually
anything except, for some reason, onions. The primary commodities that are traded are
oil, gold and agricultural products. Since no one really wants to transport all those heavy
materials, what is actually traded are commodities futures contracts or options. These are
agreements to buy or sell at an agreed upon price on a specific date. There are different
type of commodities available for trading in commodities market. Which were as follow,
as shown in diagram.

37
Commodities can be divided in four parts, as:

1. Precious Metals

2. Base Metals

3. Energies

4. Agri Products

What is commodity market?

Commodity market is an exchange for buying and selling commodities for future
delivery. It is a “Future Market” where trading is done on ‘contract’ basis. Every
commodity has different contract with different contract duration. It is an exchange
where various commodities and derivatives products are traded. Most commodity
markets across the world trade in agricultural products and other raw materials (like
wheat, barley, sugar, maize, cotton, cocoa, coffee, milk products, pork bellies, oil, metals,
pulses, spices).Each contract may have different price one contract to another, for a same
commodity. Buyer can buy in any contract for trading or for future delivery

38
What is future market?
Commodity market is a future market where trading is done on future dated contracts(i.e.
with an expiry date)Futures markets trade futures contracts, which specify that the
underlying index, currency, or commodity will be bought or sold for a specific price on a
specific date in the future (known as the expiration date). Day traders trade futures
contracts to make a profit on the difference between the buying price and the selling
price, rather than to ever actually own the underlying commodity. Even so, day traders
need to know when the current futures contract will expire, so that they can make sure
that they do not have any open positions at that time.

Futures contracts are traded by both day traders and longer term traders, but also by non
traders with an interest in the underlying commodity. For example, a grain farmer might
sell a futures contract to guarantee that he receives a certain price for his grain, or a
livestock farmer might by a futures contract to guarantee that he can buy his winter feed
supply at a certain price. Either way, both the buyer and the seller of a futures contract
are obligated to fulfill the contract requirements at the end of the contract term. Day
traders are not so concerned about these obligations because they do not keep the futures
contract until it expires

Participants in Commodities Markets?

Participants in commodities markets fall under two main categories — hedgers and
speculators. While hedgers seek to minimize and manage price risk,
speculators are those willing to take on risk in the hope of making a profit.

What Commodities Can I Trade?

You'll find a list of commodity futures contracts available to trade.There are five basic
division in which all commodities can be classified.

1. Precious metals- Gold, Silver

39
 2. Base Metals-Copper, zinc, aluminum, etc.

3. Energies-Natural Gas, Crude Oil

4. Agri Products- Spices (Black Pepper, Red chilli, Turmeric, jeera, etc.), Pulses

(Chana,Masur,Yellow Peas), Oil.

What is “MARGIN”?
It is required to deposit “INITIALL MARGIN” for trading in commodity market.
“Initial Margin” is that amount which must b deposited in the margin account at the time
of future contract is first entered into. Margin is the small portion of total money that is
needed for trading. It is the certain % of total value of money.

How is ‘margin’ determined?

Each day, your broker will calculate the current value of futures and option contracts held
in your account. If the equity in your account has declined in value to the "maintenance
margin level" (approximately 75% of the amount required to enter into the trades
originally), you are required to provide more margin money to restore the initial margin
level. This is called a "margin call." This eliminates the needs to make repeated margin
calls when daily price changes are relatively small.

What if one is unable to pay a ‘margin call’?

If you fail to meet a margin call within a reasonable period of time, which could be as
little as one hour, your brokerage firm may close out your positions to reduce your
margin deficiency. If your position is liquidated at a loss, you would continue to be liable
for that loss. You can, therefore, lose substantially more than your original margin
deposit!

40
Commodity Market – FUTURE market, based on future contracts. It is run by
following two exchanges.

1. MCX –Multi Commodity Exchange

2. NCDEX – National Commodity & Derivative Exchange

Margin is decided by both exchanges (NCDEX and MCX) and the same report is
sent to broker houses through internet and the same margin money is to maintained
by trader in his trading account

41
 MARGIN REPORT
This report contain daily margin amount payable by the members(traders). This is the
daily report which is downloaded at the beginning of the trading day before opening of
the market.

Both exchanges set there margin file on bases of marin% of money is to maintained.

NCDEX
28-Jul-08
Lot Approx
Price Lot Margi Varia Value(R Margin
Commodity Expiry LTP Quotation Size n% nt s) (Rs)
31-Jul- 123.
ALUMINIUM 08 4 RS./KG. 2000 11% 2000 246,800 26,334
29-Aug- 124.
ALUMINIUM 08 4 RS./KG. 2000 11% 2000 248,800 26,522
30-Sep- 125.
ALUMINIUM 08 5 RS./KG. 2000 11% 2000 251,000 26,757
20-Aug- 129 RS/QUINT
BARLEYJPR 08 7.6 AL 10 7% 100 129,760 8,577
19-Sep- 132 RS/QUINT
BARLEYJPR 08 3 AL 10 7% 100 132,300 8,732
20-Oct- 137 RS/QUINT
BARLEYJPR 08 3 AL 10 6% 100 137,300 8,911
20-Nov- 134 RS/QUINT
BARLEYJPR 08 7.2 AL 10 7% 100 134,720 8,865

42
 19-Dec- 138 RS/QUINT
BARLEYJPR 08 7.2 AL 10 7% 100 138,720 9,031
BRENTCRU 14-Aug- 528
DE 08 4 Rs/Barrel 100 10% 100 528,400 51,255
BRENTCRU 15-Sep- 532
DE 08 6 Rs/Barrel 100 10% 100 532,600 51,662
BRENTCRU 16-Oct- 537
DE 08 1.5 Rs/Barrel 100 10% 100 537,150 52,104
CASTORDS 20-Aug- 630.
A 08 4 RS/20 KG 10 6% 500 315,200 17,683
CASTORDS 19-Sep- 631.
A 08 4 RS/20 KG 10 6% 500 315,700 17,837
CASTORDS 20-Oct- 635.
A 08 8 RS/20 KG 10 6% 500 317,900 17,961
CASTORDS 20-Nov-
A 08 615 RS/20 KG 10 6% 500 307,500 18,173
CHLL334GT 20-Aug- 545 RS/QUINT
R 08 4 AL 5 5% 50 272,700 14,535
CHLL334GT 20-Oct- 586 RS/QUINT
R 08 4 AL 5 5% 50 293,200 14,924
CHLL334GT 19-Dec- 597 RS/QUINT
R 08 4 AL 5 5% 50 298,700 15,114
COCUDCAK 19-Sep- 545.
L 08 2 Rs/50 KGS 10 10% 200 109,040 11,177
COCUDCAK 19-Dec- 460.
L 08 1 Rs/50 KGS 10 11% 200 92,020 10,113
COCUDCAK 20-Jan- 471.
L 09 9 Rs/50 KGS 10 7% 200 94,380 6,541
19-Sep- 568.
COCUDCKDI 08 1 Rs/50 Kg 10 13% 200 113,620 14,214
19-Dec- 582.
COCUDCKDI 08 4 Rs/50 Kg 10 9% 200 116,480 9,912
19-Sep- 102.
COFFEERC 08 8 RS\KG 2000 5% 2000 205,600 10,280
19-Dec- 105.
COFFEERC 08 4 RS/KG 2000 5% 2000 210,800 10,540
20-Mar- 108.
COFFEERC 09 05 RS/KG 2000 5% 2000 216,100 10,805
20-May- 109.
COFFEERC 09 9 RS./KG 2000 5% 2000 219,800 10,990
20-Jul- 111.
COFFEERC 09 75 RS\KG 2000 5% 2000 223,500 11,175
COPELCMU 31-Jul- 334.
M1 08 75 RS/KG 1000 9% 1000 334,750 28,521
COPELCMU 29-Aug- 337.
M1 08 4 RS/KG 1000 9% 1000 337,400 28,814
COPELCMU 30-Sep-
M1 08 357 RS/KG 1000 8% 1000 357,000 29,667
COPELCMU 31-Oct-
M1 08 356 RS/KG 1000 8% 1000 356,000 29,797
COPELCMU 28-Nov- 358.
M1 08 75 RS/KG 1000 8% 1000 358,750 30,027
COPELCMU 31-Dec-
M1 08 362 RS/KG 1000 8% 1000 362,000 30,299

43
CRDPOLKD 20-Aug- 459. RS/10
L 08 7 KGS 1 6% 100 45,970 2,611
CRDPOLKD 19-Sep- 456. RS/10
L 08 85 KGS 1 6% 100 45,685 2,618
CRDPOLKD 20-Oct- 460. RS/10
L 08 75 KGS 1 6% 100 46,075 2,640
14-Aug- 521
CRUDEOIL 08 6 Rs./Barrel 100 8% 100 521,600 40,372
15-Sep- 534
CRUDEOIL 08 8 Rs./Barrel 100 8% 100 534,800 40,805
15-Oct- 595
CRUDEOIL 08 0 Rs./Barrel 100 7% 100 595,000 41,710
CSHW320KL 19-Sep- 751
M 08 9 Rs/Carton 50 5% 50 375,950 19,136
CSHW320KL 20-Nov- 764
M 08 7 Rs/Carton 50 5% 50 382,350 19,462
FURNACEOI 14-Aug- 327
L 08 86 RS/MT 10 13% 10 327,860 42,163
FURNACEOI 17-Sep- 330
L 08 93 RS/MT 10 16% 10 330,930 52,485
FURNACEOI 17-Oct- 333
L 08 66 RS/MT 10 13% 10 333,660 42,909
GARGUMJD 19-Sep- 479 RS/QUINT
R 08 8 AL 5 8% 50 239,900 18,784
GARGUMJD 20-Nov- 493 RS/QUINT
R 08 8 AL 5 8% 50 246,900 19,135
GARGUMJD 20-Jan- 511 RS/QUINT
R 09 0 AL 5 8% 50 255,500 19,418
GARSEDJD 19-Sep- 198 RS/QUINT
R 08 3 AL 10 8% 100 198,300 15,606
GARSEDJD 20-Nov- 205 RS/QUINT
R 08 6 AL 10 8% 100 205,600 15,975
GARSEDJD 20-Jan- 212 RS/QUINT
R 09 9 AL 10 8% 100 212,900 16,329
GLDPURMU 20-Aug- 127 RS/10 1,271,70
MK 08 17 GMS 10 5% 100 0 65,493
GLDPURMU 19-Sep- 127 RS/10 1,277,40
MK 08 74 GMS 10 5% 100 0 66,169
GLDPURMU 20-Oct- 127 RS/10 1,278,50
MK 08 85 GMS 10 5% 100 0 66,610
GNOEXPRK 20-Aug- 709.
T 08 15 RS/10 KG 10 6% 1000 709,150 40,776
GNOEXPRK 19-Sep-
T 08 715 RS/10 KG 10 6% 1000 715,000 41,113
GNOEXPRK 20-Oct- 721.
T 08 1 RS/10 KG 10 6% 1000 721,100 41,463
GNOEXPRK 20-Nov- 727.
T 08 25 RS/10 KG 10 6% 1000 727,250 41,817
20-Aug- 562.
GNSHELJNG 08 6 RS/20 KG 10 5% 500 281,300 14,065
19-Sep- 567.
GNSHELJNG 08 25 RS/20 KG 10 5% 500 283,625 14,181
20-Oct- 572.
GNSHELJNG 08 1 RS/20 KG 10 5% 500 286,050 14,303

44
 20-Nov- 576.
GNSHELJNG 08 95 RS/20 KG 10 5% 500 288,475 14,424
GOLD100MU 20-Aug- 127
M 08 46 RS\10GMS 100 5% 10 127,460 6,309
GOLD100MU 19-Sep- 128
M 08 10 RS\10GMS 100 5% 10 128,100 6,354
GOLD100MU 20-Oct- 128
M 08 49 RS\10GMS 100 5% 10 128,490 6,412
GURCHMUZ 19-Sep- 682. RS/40
R 08 2 KGS 40 5% 400 272,880 13,944
GURCHMUZ 20-Nov- 582. RS/40
R 08 4 KGS 40 6% 400 232,960 12,836
GURCHMUZ 19-Dec- 592. RS/40
R 08 2 KGS 40 5% 400 236,880 13,005
JEERAUNJH 19-Sep- 133 RS/QUINT
A 08 44 AL 3 8% 30 400,320 32,386
JEERAUNJH 20-Oct- 136 RS/QUINT
A 08 37 AL 3 8% 30 409,110 32,852
JEERAUNJH 20-Nov- 138 RS/QUINT
A 08 46 AL 3 8% 30 415,380 33,189
JUTRAWKO 20-Aug- 145 RS/QUINT
L 08 0 AL 10 6% 100 145,000 8,367
JUTRAWKO 19-Sep- 152 RS/QUINT
L 08 8 AL 10 6% 100 152,800 8,679
JUTRAWKO 20-Oct- 154 RS/QUINT
L 08 1 AL 10 6% 100 154,100 8,753
KAPASSRN 27-Feb-
R 09 585 Rs/20 KG 1 8% 200 117,000 9,688
KAPASSRN 31-Mar-
R 09 604 Rs/20 KG 1 8% 200 120,800 9,954
KAPASSRN 30-Apr- 591.
R 09 7 Rs/20 KG 1 8% 200 118,340 9,846
20-Aug- 105 RS/QUINT
MAIZYRNZM 08 6 AL 10 15% 100 105,600 15,819
19-Sep- 105 RS/QUINT
MAIZYRNZM 08 3 AL 10 15% 100 105,300 15,869
20-Oct- 100 RS/QUINT
MAIZYRNZM 08 5.5 AL 10 11% 100 100,550 11,513
20-Nov- RS/QUINT
MAIZYRNZM 08 967 AL 10 12% 100 96,700 11,488
20-Aug- 117 RS/QUINT
MSOILCGNR 08 5.55 AL 10 7% 100 117,555 8,687
19-Sep- 118 RS/QUINT
MSOILCGNR 08 5.25 AL 10 7% 100 118,525 8,759
20-Oct- 119 RS/QUINT
MSOILCGNR 08 5.35 AL 10 7% 100 119,535 8,834
20-Nov- 120 RS/QUINT
MSOILCGNR 08 5.55 AL 10 7% 100 120,555 8,909
20-Aug- 418
MSRBLDIDR 08 5 Rs/Quintal 10 10% 100 418,500 40,595
19-Sep- 422
MSRBLDIDR 08 0 Rs/Quintal 10 6% 100 422,000 24,054
20-Oct- 425
MSRBLDIDR 08 6 Rs/Quintal 10 6% 100 425,600 24,259

45
 20-Aug-
MTHOILCHD 08 740 Rs/KG 360 46% 360 266,400 122,278
19-Sep-
MTHOILCHD 08 740 Rs/KG 360 46% 360 266,400 122,997
20-Oct- 805.
MTHOILCHD 08 8 Rs/KG 360 43% 360 290,088 123,984
20-Nov- 812.
MTHOILCHD 08 7 Rs/KG 360 43% 360 292,572 125,045
31-Jul- 781.
NICKEL 08 5 RS./KG. 250 13% 250 195,375 25,829
29-Aug- 787.
NICKEL 08 75 RS./KG. 250 13% 250 196,938 26,035
30-Sep- 794.
NICKEL 08 65 RS./KG. 250 13% 250 198,663 26,263
PPRMLGKO 20-Aug- 139 RS/QUINT
C 08 92 AL 1 8% 10 139,920 10,718

MCX
28-
Jul-08
Price Lot Approx
Commod Quotati Size Margin Lot Margin
ity Expiry LTP on (Qty) % Value(Rs) (Rs)
ALUMINI 31-Jul-
UM 08 123.6 1KGS 5000 6% 618,000 37,080
ALUMINI 29-Aug-
UM 08 124.55 1KGS 5000 6% 622,750 34,251
ALUMINI 30-Sep-
UM 08 125.35 1KGS 5000 6% 626,750 37,605
ARECAJ 14-Aug-
HAJI 08 8850 100KGS 10 5% 88,500 4,425
ARECAJ 15-Sep-
HAJI 08 8827 100KGS 10 5% 88,270 4,414
ARECAJ 15-Oct-
HAJI 08 8850 100KGS 10 5% 88,500 4,425
25-Aug-
ATF 08 6595 1BBL 100 7% 659,500 46,165
25-Sep-
ATF 08 6591 1BBL 100 7% 659,100 46,137
24-Oct-
ATF 08 6589 1BBL 100 7% 658,900 46,123
25-Nov-
ATF 08 6597 1BBL 100 7% 659,700 46,179
24-Dec-
ATF 08 6589 1BBL 100 7% 658,900 46,123
BRCRUD 8-Aug-
EOIL 08 5350 1BBL 100 5% 535,000 26,750
BRCRUD 10-Sep-
EOIL 08 5315 1BBL 100 5% 531,500 26,575
BRCRUD 10-Oct- 5318 1BBL 100 5% 531,800 26,590

46
EOIL 08
CARDAM 14-Aug-
OM 08 639.5 1KGS 500 6% 319,750 17,586
CARDAM 15-Sep-
OM 08 607.25 1KGS 500 6% 303,625 18,218
CARDAM 15-Oct-
OM 08 600 1KGS 500 6% 300,000 16,500
CASHEW 14-Aug-
KERN 08 334 1KGS 1130 5% 377,420 18,871
CASHEW 15-Sep-
KERN 08 340 1KGS 1130 5% 384,200 19,210
25-Nov-
CER 08 1490.5 1MT 250 6% 372,625 22,358
25-Feb-
CER 09 1444.5 1MT 250 6% 361,125 21,668
15-Dec-
CFI 08 1957.5 1MT 200 6% 391,500 23,490
15-Dec-
CFI 09 1878.5 1MT 200 6% 375,700 22,542
15-Dec-
CFI 10 1920 1MT 200 6% 384,000 23,040
15-Dec-
CFI 11 1845.5 1MT 200 6% 369,100 22,146
14-Dec-
CFI 12 1878 1MT 200 6% 375,600 22,536
29-Aug-
COFROB 08 100.1 1KGS 1000 5% 100,100 5,005
31-Oct-
COFROB 08 98.7 1KGS 1000 5% 98,700 4,935
31-Dec-
COFROB 08 97.2 1KGS 1000 5% 97,200 4,860
29-Aug-
COPPER 08 337.4 1KGS 1000 5% 337,400 16,870
26-Nov-
COPPER 08 337.45 1KGS 1000 5% 337,450 16,873
COTTON 15-Oct-
LONG 08 28050 1Candy 25 5% 701,250 35,063
COTTON 31-Jul-
SEED 08 1635 100KGS 100 5% 163,500 8,175
COTTON 30-Aug-
SEED 08 1642 100KGS 100 5% 164,200 8,210
31-Jul-
CPO 08 450.7 10KGS 1000 5% 450,700 22,535
30-Aug-
CPO 08 450.5 10KGS 1000 5% 450,500 22,525
30-Sep-
CPO 08 452.4 10KGS 1000 5% 452,400 22,620
31-Oct-
CPO 08 450.1 10KGS 1000 5% 450,100 22,505
CRUDEO 14-Aug-
IL 08 5214 1BBL 100 7% 521,400 36,498
CRUDEO 15-Sep-
IL 08 5237 1BBL 100 7% 523,700 36,659
CRUDEO 15-Oct-
IL 08 5349 1BBL 100 7% 534,900 37,443

47
CRUDEO 14-Nov-
IL 08 5404 1BBL 100 7% 540,400 37,828
14-Aug-
DRB 08 4834 1MT 50 5% 241,700 12,085
15-Sep-
DRB 08 4807 1MT 50 5% 240,350 12,018
15-Oct-
DRB 08 4781 1MT 50 5% 239,050 11,953
FURNAC 31-Jul-
EOIL 08 32675 1MT 10 5% 326,750 16,338
FURNAC 29-Aug-
EOIL 08 33026 1MT 10 5% 330,260 16,513
5-Aug- 10GRM
GOLD 08 12687 S 100 4% 1,268,700 50,748
4-Oct- 10GRM
GOLD 08 12790 S 100 4% 1,279,000 51,160
5-Dec- 10GRM
GOLD 08 12854 S 100 4% 1,285,400 51,416
5-Feb- 10GRM
GOLD 09 12845 S 100 5% 1,284,500 57,803
4-Apr- 10GRM
GOLD 09 13001 S 100 5% 1,300,100 58,505
GOLDGU 31-Jul-
INEA 08 10165 8GRMS 1 4% 10,165 407
GOLDGU 30-Aug-
INEA 08 10250 8GRMS 1 4% 10,250 410
5-Aug- 10GRM
GOLDM 08 12689 S 10 4% 126,890 5,076
5-Sep- 10GRM
GOLDM 08 12777 S 10 4% 127,770 5,111
4-Oct- 10GRM
GOLDM 08 12810 S 10 4% 128,100 5,124
GUARGU 20-Aug-
M 08 4957 100KGS 100 5% 495,700 24,785
GUARGU 19-Sep-
M 08 5044 100KGS 100 5% 504,400 25,220
GUARGU 20-Oct-
M 08 5039 100KGS 100 5% 503,900 25,195
GUARSE 20-Aug-
ED 08 1986 100KGS 100 5% 198,600 9,930
GUARSE 19-Sep-
ED 08 1980.5 100KGS 100 5% 198,050 9,903
GUARSE 20-Oct-
ED 08 1995 100KGS 100 5% 199,500 9,975
GUARSE 20-Nov-
ED 08 2009 100KGS 100 5% 200,900 10,045
IGOLDA 29-Jul- 10GRM
HM 08 12792 S 100 4% 1,279,200 51,168
IGOLDA 5-Aug- 10GRM
HM 08 12616 S 100 4% 1,261,600 50,464
IGOLDD 29-Jul- 10GRM
EL 08 12792 S 100 4% 1,279,200 51,168
IGOLDD 5-Aug- 10GRM
EL 08 12625 S 100 4% 1,262,500 50,500
IGOLDK 29-Jul- 12811 10GRM 100 4% 1,281,100 51,244

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OL 08 S
IGOLDK 5-Aug- 10GRM
OL 08 12622 S 100 4% 1,262,200 50,488
IGOLDM 29-Jul- 10GRM
AHM 08 12792 S 10 4% 127,920 5,117
IGOLDM 5-Aug- 10GRM
AHM 08 12616 S 10 4% 126,160 5,046
IGOLDM 29-Jul- 10GRM
DEL 08 12792 S 10 4% 127,920 5,117
IGOLDM 5-Aug- 10GRM
DEL 08 12625 S 10 4% 126,250 5,050
IGOLDM 29-Jul- 10GRM
KOL 08 12811 S 10 4% 128,110 5,124
IGOLDM 5-Aug- 10GRM
KOL 08 12622 S 10 4% 126,220 5,049
IGOLDM 29-Jul- 10GRM
MUM 08 12868 S 10 4% 128,680 5,147
IGOLDM 5-Aug- 10GRM
MUM 08 12667 S 10 4% 126,670 5,067
IGOLDM 29-Jul- 10GRM
UM 08 12868 S 100 4% 1,286,800 51,472
IGOLDM 5-Aug- 10GRM
UM 08 12667 S 100 4% 1,266,700 50,668
14-Aug-
JEERA 08 12536 100KGS 30 5% 376,080 18,804
15-Sep-
JEERA 08 12542 100KGS 30 5% 376,260 18,813
31-Jul-
JUTE 08 1448.5 100KGS 100 5% 144,850 7,243
30-Aug-
JUTE 08 1585.5 100KGS 100 5% 158,550 7,928
30-Sep-
JUTE 08 1643.5 100KGS 100 5% 164,350 8,218
31-Oct-
JUTE 08 1680 100KGS 100 5% 168,000 8,400
KAPASK 31-Jul-
HALI 08 489.8 50KGS 100 5% 48,980 2,449
KAPASK 30-Aug-
HALI 08 506.5 50KGS 100 5% 50,650 2,533
KAPASK 30-Sep-
HALI 08 522.3 50KGS 100 5% 52,230 2,612
31-Jul-
LEAD 08 90.25 1KGS 5000 10% 451,250 42,869
29-Aug-
LEAD 08 91.05 1KGS 5000 10% 455,250 43,249
30-Sep-
LEAD 08 91.7 1KGS 5000 9% 458,500 41,265
14-Aug-
MAIZE 08 1056 100KGS 100 5% 105,600 5,280
15-Sep-
MAIZE 08 1069 100KGS 100 5% 106,900 5,345
MENTHA 31-Jul-
OIL 08 737.4 1KGS 360 9% 265,464 22,564
MENTHA 30-Aug-
OIL 08 751.9 1KGS 360 9% 270,684 23,008

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MENTHA 30-Sep-
OIL 08 762.7 1KGS 360 9% 274,572 23,339
MENTHA 31-Oct-
OIL 08 773.5 1KGS 360 8% 278,460 22,277
MESCRU 31-Jul-
DOIL 08 5607.5 1BBL 100 5% 560,750 28,038
MESCRU 29-Aug-
DOIL 08 5523.5 1BBL 100 5% 552,350 27,618
MESCRU 30-Sep-
DOIL 08 5541.5 1BBL 100 5% 554,150 27,708
MGGUR 20-Aug-
CHAKU 08 592.7 40KGS 250 5% 148,175 7,409
MGGUR 19-Sep-
CHAKU 08 601.2 40KGS 250 5% 150,300 7,515
MUSTAR 20-Aug-
DJPR 08 646.8 20KGS 500 5% 323,400 16,170
NATURA 20-Aug-
LGAS 08 385 1mmBtu 1250 13% 481,250 62,563
NATURA 19-Sep-
LGAS 08 398.6 1mmBtu 1250 13% 498,250 64,773
NATURA 20-Oct-
LGAS 08 410.9 1mmBtu 1250 7% 513,625 35,954
31-Jul-
NICKEL 08 775.9 1KGS 250 7% 193,975 13,578
29-Aug-
NICKEL 08 794.5 1KGS 250 7% 198,625 13,904
30-Sep-
NICKEL 08 806.8 1KGS 250 10% 201,700 20,170
14-Aug-
PEPPER 08 14668 100KGS 10 5% 146,680 7,334
15-Sep-
PEPPER 08 14710 100KGS 10 5% 147,100 7,355
15-Oct-
PEPPER 08 14492 100KGS 10 5% 144,920 7,246
15-Nov-
PEPPER 08 14600 100KGS 10 5% 146,000 7,300
PLATINU 26-Sep- 10GRM
M 08 23655 S 50 7% 1,182,750 76,879
PLATINU 29-Dec- 10GRM
M 08 26547 S 50 6% 1,327,350 73,004
REDCHIL 14-Aug-
LI 08 6353 100KGS 25 5% 158,825 7,941
REDCHIL 15-Sep-
LI 08 6377 100KGS 25 5% 159,425 7,971
RJKCAS 30-Sep-
SEED 08 3215.5 100KGS 50 5% 160,775 8,039
SESAME 14-Aug-
SEED 08 7284 100KGS 50 5% 364,200 18,210
SESAME 15-Sep-
SEED 08 7310 100KGS 50 5% 365,500 18,275
5-Sep-
SILVER 08 24392 1KGS 30 5% 731,760 36,588
5-Dec-
SILVER 08 24698 1KGS 30 5% 740,940 37,047
SILVER 5-Mar- 24935 1KGS 30 5% 748,050 37,403

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 09
5-May-
SILVER 09 25010 1KGS 30 5% 750,300 37,515
30-Aug-
SILVERM 08 24398 1KGS 5 5% 121,990 6,100
29-Nov-
SILVERM 08 24681 1KGS 5 5% 123,405 6,170
28-Feb-
SILVERM 09 24853 1KGS 5 5% 124,265 6,213
30-Apr-
SILVERM 09 25463 1KGS 5 5% 127,315 6,366
SOYABE 20-Aug-
AN 08 2685 100KGS 100 5% 268,500 13,425
SOYABE 19-Sep-
AN 08 2648 100KGS 100 5% 264,800 13,240
SPONGE 14-Aug-
IRON 08 29290 1MT 15 5% 439,350 21,968
SPONGE 15-Sep-
IRON 08 29155 1MT 15 5% 437,325 21,866
STEELFL 14-Aug-
AT 08 47250 1MT 25 5% 1,181,250 59,063
STEELIG 9-Aug-
TMG 08 36355 1MT 10 6% 363,550 21,813
STEELIG 10-Sep-
TMG 08 35725 1MT 10 5% 357,250 17,863
STEELIG 10-Oct-
TMG 08 34960 1MT 10 5% 349,600 17,480
20-Aug-
SUGARM 08 1728 100KGS 100 5% 172,800 8,640
19-Sep-
SUGARM 08 1707 100KGS 100 5% 170,700 8,535
20-Oct-
SUGARM 08 1716 100KGS 100 5% 171,600 8,580
20-Nov-
SUGARM 08 1740 100KGS 100 5% 174,000 8,700
SUGARS 20-Aug-
KLP 08 1620 100KGS 100 5% 162,000 8,100
SUGARS 19-Sep-
KLP 08 1554 100KGS 100 5% 155,400 7,770
SUGARS 20-Oct-
KLP 08 1575 100KGS 100 5% 157,500 7,875
SUGARS 20-Nov-
KLP 08 1549 100KGS 100 5% 154,900 7,745
SUGARS 19-Dec-
KLP 08 1540 100KGS 100 5% 154,000 7,700
31-Jul-
TIN 08 968.25 1KGS 500 5% 484,125 24,206
29-Aug-
TIN 08 948.5 1KGS 500 6% 474,250 26,084
30-Sep-
TIN 08 993.5 1KGS 500 5% 496,750 24,838
TURMER 20-Aug-
IC 08 4907 100KGS 100 5% 490,700 24,535
TURMER 19-Sep-
IC 08 4903 100KGS 100 6% 490,300 26,967

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TURMER 20-Oct-
IC 08 4950 100KGS 100 6% 495,000 29,700
TURMER 20-Nov-
IC 08 5200 100KGS 100 7% 520,000 36,400
31-Jul-
ZINC 08 77.6 1KGS 5000 8% 388,000 31,040
29-Aug-
ZINC 08 79.05 1KGS 5000 8% 395,250 31,620
30-Sep-
ZINC 08 80.2 1KGS 5000 8% 401,000 32,080

Trader trades in LOTS of commodity

One has to buy minimum of one lot. Suppose there is a trader who wants to buy gold. He
has to buy minimum of 1kg of gold, as the lot size of Gold is 1kg, and multiple of that,
i.e.1kg, 2kg, 3kg, so on.

Lot size of some of commodities are listed as follows:

Gold 1 kg
Gold Mini 100gm
Gold Gini 8gm
Silver 30kg
Silver Mini 5kg
Copper 1MT
Zinc 5tons
Aluminum 5tons
Lead 5tons
Crude oil 100barrels
Natural Gas 1250 mm Btu
Jeera 3MT
Cardamon 5quintals (500kg)
Black Perrer 1MT
Red chilli 2.5MT
Turmeric 10MT

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Chana 10MT
Masur 10MT
Yellow Peas 10MT 1250 mm Btu
Jeera 3MT
Cardamon 5quintals (500kg)
Black Perrer 1MT
Red chilli 2.5MT
Turmeric 10MT
Chana 10MT
Masur 10MT
Yellow Peas 10MT

Now we are aware of basic terms of trading in commodities. Now further we discuss how
trading is done in commodity market What are the basic requirements to start trading in
commodity market.

Procedure to start trading in commodity market

To start trading in commodity market. One need to open its account in exchange through
any brokerage house (like Indiabulls).Once the account is opened then trader can trade
,hold, take delivery of any commodity. Now we discuss trading system, commodity,
market chart, and profit calculation with example, how to minimize risk, M2M(mark to
market) file, etc.

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 TRADING SYSTEM

MCX(multi commodity exchange) and NCDEX(national commodity and derivative

exchange) operates on the ODIEN system, a fully automated screen based trading system,
which adopts the principle of an order driven market.

ODIN Screen
The ODIN system display following types of Information. They are:

Buy Price- it’s the current market price at which buyers can buy the commodity. i.e. if
one want to sell commodity, it will be sold at BUY PRICE, because it is the purchase
(buy) price of commodity.

Sell Price-it’s the current market price at which seller can sell the commodity. i.e. if one
want to buy a commodity, it will be purchased at PURCHASE PRICE, because it is the
selling (sell) price of commodity.

LTP(Last trade price): it’s the price at which last trade is done

Highest Price: it is highest price of a particular commodity for a particular day.

Lowest Price- it is the lowest of a particular commodity for a particular day.

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Volume: it is the volume that has been traded of a particular commodity for a particular
day.

%change in price, comparison between opening price and current market price: it is
the %change in price at which market is opened and the current piece of a particular
commodity for a particular day.

%change in price as compare to closing price: it is the %change in yesterday’s closing

price and today’s opening price.

This % indicate, how much market of a commodity is high or low today.

Trading System - Order Books

The commodity trading system provides complete flexibility to members in the kinds of
orders that can be placed by them. Orders are booked at a particular price as per trader’s
choice and the same is sold or bought, whenever bid price matches market price.

Stop-Loss: it is the level that is decided by the trader, level to which he is agree to bear
loss on a particular commodity.
Example: we purchase 2 lot of Gold M @ Rs.12687 and we put stop loss at 12680.it
means we are agree to bear loss up to Rs.7(rs.12687 – Rs.12680) per 10 gm, but not more
than that.

Now when ever market price of GOLD reaches Rs.12680 then our 2lot Gold M will
automatically get sold.

It might be the circumstance that after once reaching price at Rs.12680 it will again start
increasing but we are not ready to take risk any more (i.e. of amount more than Rs.7 /10
gm loss as price may fall more also.

The stop loss condition is met under the following circumstances :

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Sell order - A sell order in the Stop Loss book gets triggered when the last traded
price in the normal market reaches or falls below the trigger price of the order.

Buy order - A buy order in the Stop Loss book gets triggered when the last traded
price in the normal market reaches or exceeds the trigger price of the order.

Square-up
In commodities either we have to take delivery of good(commodity) before completion of
a contract duration or to square up our position. SQUARE UP mean to balance our
account, i.e. if we have something kept purchased in out trading account then the same is
to be sold up and vise-versa.

Short selling
It is one of the basic feature of equity and commodity market.
It means one can sell what he don’t have, and then later can square-up his account buy
purchasing the sold quantity.
This is done when price of a commodity is falling, then trader to earn profit can first sell
certain quantity of a commodity and when price fall more then purchase that agreeg
quantity that has been sold.
Like this he can make the profit of amount, i.e. difference between selling and purchase
price.

Freeze/circuit
Lower freez/circuit or seller freeze
It is a market situation when there are lots of sellers and no buyer.
Then the price falls, as due to close competition between sellers, sellers get ready to sell
their good at lower price.
Due to this high fall in price with absence of buyers, market get freezed and get LOWER
CIRCUIT.

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Upper freeze/circuit or buyer freeze
It is the situation when market go too high with absence of seller and presence of large
no. of buyers.
as in this situation, buyer is ready to buy even at higher price but still there is no seller to
sell that good.

QUANTITY FREEZE
All orders placed by members have to be within the quantity specified by the exchange in
this regard. Any order exceeding this specified quantity will not be executed but will lie
pending with the exchange as a quantity freeze. Table below gives the quantity freeze for
each commodity contract. In respect of order which have come under quantity freeze, the
member is required to conform to the exchange that there is no inadvertent error in the
order entry and the order is genuine. On such confirmation, the exchange can approve
such order. However, in exceptional cases, the exchange may, at its discreation, not allow
the order that have come under quantity freeze for execution for any reason whatsoever
including non-availability of exposure limits.
Column1 Column2
Asset Symbol Quantity Freeze Unit
GLDPURMUM 30,000 gm
SLVPURDEL 1,500 kg
SYBEANIDR 300 MT (metric tonnes)
SYOREFINDR 300 MT (metric tonnes)
RMSEEDJPR 300 MT (metric tonnes)
RMOEXPJPR 300 MT (metric tonnes)
RBDPLNKAK 300 MT (metric tonnes)
CRDPOLKDL 300 MT (metric tonnes)
COTJ34BTD 3,300 bales
COTSI6ABD 3,300 bales

Commodity future contract specification

Base Max. Order
Commodities Lot Size/Trading Units Tic Size(Rs.) Value Size Delivery Unit
gold 1 kg 1/10gm 10gm 10gm 1 kg
gold m 100gm 1/10gm 10gm 10gm 100 gm
silver 30kg 1/kg 1kg 600kg 30 kg

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 silver m 5kg 1/kg 1kg 600kg 30 kg
Platinum 500 gm 1/10gm 10gm 5kg 500 gm
copper 1MT 0.05/kg 1kg 20000MT 9 MT
zinc 5tons 0.05/kg kg 100 tons 10 Tonns
nicle 250kg 0.05/kg 1kg 24 Mt 3 MT
aluminium 5tons 150/MT 1kg 150 MT 10MT
lead 5tons 0.05/kg kg 100 tons 10 Tons
cruid oil 100barrels 0.1/barrels 10gm 10000 barrels 50000 barrels
natural gas 1250mm Btu 0.1/ - 20000 MM Btu 10000 barrels
black pepper 1MT 1/kg 100kg 50 MT 1MT
red chilli 2.5MT 1/kg 100kg 100 MT 2.5MT*
turmeric 10MT 1/kg quintal 101 MT 10 MT
jeera 3MT 1/kg - 60MT 3MT
cardamon 500kg (5quintals) 0.25/kg - … 500 kg
chana 10MT 1/kg 100kg 100 MT 10 MT
masur 10MT 1/kg 100kg 4000 MT 10 MT
yellow peas 10MT 1/kg 100kg 100 MT 10 MT

Tick size for contracts

Tick size is the smallest price change that can occur for the trades on the exchange. The
tick size in respect of all futures contracts admitted to dealings on the NCDEX is 5paisa.

FACTORS THAT HELP INVESTER IN DECIDING, IN WHICH COMMODITY

HE SHOULD INVEST

• Margin Money
• Market movement
• Profit as per lot size

There are many more factors which effect the investment decision, but these three are the
basic factors that one must consider before going for deciding the commodity he want to
trade in.
Now we will discuss these three in brief:

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 • MARGIN MONEY: How much money one is ready to invest as initial margin
and how much money is needed as margin in different commodities. Let say for
example one is ready to invest Rs.50,000/- as initial money and want to trade in
precious metals. Market rate of GOLD is Rs.12687 (for 10 gm), lot size 1kg,
Margin- 4%, lot value - Rs.1268700%, margin money is Rs.50748 (i.e.4% of
Rs.1268700). With Rs.50000 he cant trade in gold. So he should go for some
other commodity. He has to look for some other metal
• MARKET MOVEMENY: it is the movement one commodity shows. If one
invest in commodity which shows less or no moment, than it will be not be
possible to earn profit frequently.
• LOT SIZE : one should consider the lot size of the commodity, and as per lot
size one calculate the margin money needed to invest and match that with his plan
of initial investment.

SOME OF OTHER FACTORS THAT EFFECT INVESTMENT DECISION ARE:

 Market trend
 US Based Data
 Unemployment data
 Inflation/deflation
 Housing loans
 Stock (stock of different commodities come in different week days, that to effect
price of good and investment decision of investor)
 Technical charts
 Fundamental news
 Weather condition (mainly for investment in agri products)
 GDP, etc.

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CLEARING AND SETTLEMENT
Most future contracts do not lead to the actual physical delivery of the underlying asset.
The settlement is done by closing out open positions, physical delivery or cash
settlement. All these settlement functions are taken care of by an entity called clearing
house or clearing corporation. National Securities Clearing Corporation Limited
(NSCCL) undertakes clearing of trades executed on the NCDX. Settlement guarantee
fund is maintained and managed by NCDEX.

CLEARING
Clearing of trade takes that takes place on an exchange happens through the exchange
clearing house. A clearing house is a system by which exchange guarantee the faithful
compliance of all trade commitments undertaken on the trading floor or economically
over the electronic trading system. The main task of clearing house is to keep track of all
the transactions that take place during a day or so that the net position of each of its
member can be calculated. It guarantees the performance of the parties to each
transaction. Typically it is responsible for the following:
1. Effecting timely settlement.
2. Trade registration and follow up
3. Control of the evolution of open interest.
4. Financial clearing of payment flow.
5. Physical settlement (by delivery) or financial settlement (by price difference) of
contracts.
6. Administration of financial guarantees demanded by the participants.

Clearing mechanism Only clearing member including professional clearing members

(PCMs) are entitled to clear and settle contracts through the clearing house. At NCEX,
after the trading hours on the expiry date, based on the available information, the
matching for deliveries takes place firstly, on the basis of locations and then randomly,
keeping in view the factors such as available capacity of the vault/warehouse,
commodities already deposited and dematerialized and offered for delivery etc. matching

60
done by this process is binding on the clearing members. After completion of the
matching process, clearing members are informed of the deliverable/receivable position
and the unmatched positions. Unmatched positions have to be settled in cash. The cash
settlement is only for the incremental gain/loss as determined on the basis of final
settlement price.

 Clearing banks
NCDEX has distinguished “ICICI Bank Limited, Canara Bank, AXIS Bank
Limited and HDFC Bank Limited” as clearing banks through whom funds to be
paid and/ or to be received must be settled. Every clearing member is required to
maintain and operate a clearing account with any of these banks, these clearing
accounts are used exclusively for clearing operations i.e. for settling funds and
other obligations to NCDEX including payment of margin and penal charges.

 Depositary participants
Every clearing member is required to maintain and operate a CM pool account
with any of the empanelled depository participant. The CM pool account is to be
used exclusively for clearing operations i.e., for settlement and receiving
deliveries from NCDEX.

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 SETTLEMENT
Future contracts have of two types of settlements, the MTM settlement which happens on
a continuous basis at the end of each day, and the final settlement which happens on the
last trading day of the future contract. On the NCDEX, daily MTM settlement and final
MTM settlement in respect of admitted deals in future contracts are cash settled by
debiting/ crediting the clearing accounts of CMs with the respective clearing bank.
• Daily settlement price- closing price as arrived after closing session of the
relevant future contract for the trading day.
• Final settlement price- closing price is the underlying commodity on the last
trading day of the future contract.

SETTLEMENT MECHANISM
Daily mark to market settlement
Daily mark to market settlement is done till the date of contract expiry. This is done to
take care of daily price fluctuations for all traders. All the open positions of the members
are marked to market at the end of the day and the Profit/loss is determined as below:
• On the day of entering into the contract, it is the difference between the expiry
value and daily settlement price of that day.
• On any intervening days, when the members holds an position, it is the difference
between the daily settlement price for that day and the previous day’s settlement
price.

FINAL SETTLEMENT
On the date of expiry, the final settlement price is the spot price on the expiry date. The
spot prices are collected from members across the country through polling. The pooling

62
bid/ask prices are bootstrapped and the mid of the two bootstrapped prices is taken as the
final settlement price.

SETTLEMENT METHODS
Settlement of future contracts on the NCDEX can be done in the three ways –
1. Physical delivery of the underlying asset
2. Closing out by offsetting positions
3. Cash settlement.
Additional Charges Other Than Brokerage Levied On the Investor?
The trading member can charge:
1. Securities Transaction Tax.
2. Service tax as applicable.
3. Transaction charges levied by MCX and NCDEX, Stamp duty and other
charges directly attributable to the transaction. The brokerage and service tax is
indicated separately in the contract note.

Rights of Investors
The investor has right to get –
• Proof of price/brokerage charged
• Money/Commodity on time
• Statement of Accounts and Contract Note from trading member

Obligations of Investor
The obligations to investor are –
• Sign a proper Member-Constituent Agreement
• Possess a valid contract or purchase/sale note
• Deliver commodity & make payment on time
• Provide Margin before trade
Various kinds of accounts that are needed to trade via Internet with Broker
This facility is provided by Indiabulls through its online trading website
www.Indiabulls.com

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 CONCLUSION

It has been found and demonstrated in this study that organized commodity market in
India is on a fast paced road to success. This has been considered that today investors are
more risk prone and they prefer to analyze market before looking for the investment
options. For India the journey has begun and will take considerable time before the
organized commodity market can come in the same proximity as that of other investment
options. Especially for the maximum returns, customers trust the mutual funds which
provide them with vast number of investment options and equity holding to give them a
better deal than the organized. Though it is comparatively more risky to put forth one’s
savings in commodity but gives higher returns and it is more liquid than that of other
forms of investment.
Now it has become a benchmark for those who are ready to invest a large
amount of that part of income which is left after due consumption. It is easily convertible
and have a more personal form of customer relationship management than other sectors
which are not as personal due to its wide client base. But slowly and steadily the
commodity investment in India is and will continue to increase its share in the market and
gain acceptability with the consumers.
Best side of commodity market is that it is providing option of PHYSICAL
DELIVERY of commodity. And it provide higher profit margin but on same side risk is
also higher. As per business saying “HIGHER THE RISK, HIGHER THE PROFIT”, it
applies over here this investment market.

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 REFERENCES:
Websites
• www.Google.com

• www.kitco.com

• www.commodityonline.com

• www.mcxindia.com

• www.indiabulls.com

Newspapers

• NCFM commodity market module work book

• NCFM capital market dealer module work book

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