Awareness programme on Hedging Using Bullion Futures

In its incessant efforts to educate the commodity market participants, especially the bullion stakeholders about hedging price risks emanating from the volatility in bullion prices, Multi Commodity Exchange of India Ltd. (MCX) organised an awareness programme in association with Shree Choksi Mahajan, Manekchowk, on April 18, 2015 at Ahmedabad. The programme was specifically tailored for members of the association, and local bullion market participants of Ahmedabad.

The interactive programme focussed on the fundamentals of commodity trading, benefits of hedging, and delivery procedures of gold & silver at MCX, among others. The experts threw light on market fundamentals and future outlook of the bullion industry. The forum highlighted the intricacies of commodity futures market and guided the participants to explore hedging opportunities in the commodity sector.

The participants were also briefed about different variants of gold—1 kg to as small as 1gm— and silver— varying from 30 kg to 1 kg—futures contracts with different denominations offered by the exchange, to cater to the needs of varied market participants.

While explaining about the benefits of trading on the Exchange, Mr. Ayub Malek, Senior Manager-Business Development, MCX said “It provides a transparent price discovery and hedging platform to the commodity stakeholders for trading futures contracts of different commodities, including bullion. Furthermore, on the exchange, the fair-value prices are determined through active participation of a large number of stakeholders of the commodity value chain, who have access to information on the demand and supply conditions.”

Dr. Piyush M. Bhansali, President, Shree Choksi Mahajan, Manekchowk said, “Jewellery manufacturers cannot operate their businesses without addressing the risk that is attached with gold prices. With given ups and downs in the bullion prices in recent times, hedging price risks by trading on commodity exchanges such as MCX, should definitely be given a thought.”