Commodity trading markets aren’t exclusive to the United States; Agricultural and energy products exist worldwide. From the grains and ethanol handled by the Chicago Board of Trade to the rubber and precious metals offered by the Cambodian Mercantile Exchange, commodity trading is an international interest.
The majority of commodities markets around the world deal with the trading of raw materials such as cotton, coffee, and wheat.
One of those trading countries is India which developed an independent exchange in 2003.
Regulation and Function
The Commodity Futures Trading Commission establishes the rules and regulations for commodities markets in the United States, while the National Futures Association enforces them. However, in Mumbai, India where the MCX resides, the regulatory authority is known as the Forward Markets Commission or FMC.
One of the responsibilities of the FMC is to collect and publish information on the trading conditions of commodities including pricing and supply and demand.
Ambition and Strength
At MCX’s inauguration, Mukesh Ambani, Chairman and Managing Director of Reliance Industries Ltd prophetically proclaimed, “Globally, the volume of commodities traded is three times the volume of equities traded. This points to an opportunity for commodity exchanges worth $600 billion.
He pointed to four commodity categories being able to accomplish this ambitious goal; agricultural, bullion, metals, and edible oils. What a difference five years makes!
As of 2009, MCX was the sixth largest commodity exchange in the world and the leader in silver trading. It is the number one commodity exchange in its home country of India. Though gold is the highest traded, MCX deals in futures trading of various commodities from bullion and other metals to energy and agricultural offerings such as potatoes and appropriately enough, the Indian herb cardamom.
Per a press release from MCX’s representative, Setu Shah,
“Prices of MCX in Gold, Silver, Copper, Nickel, Zinc as well as Crude Oil have become reference points for the spot market and have become a basis for decision making for the participants of the ecosystem. This price has become a benchmark price since India has a significant share of trade in metal and energy segments giving India its rightful place as a “Price Setter.”
MCX and ISO
International Organization for Standardization (ISO) establishes international standards for business, government and society. Technical committees made up of experts in business, industry and technology evaluate proposals to determine whether or not those items hold “global relevance.” This means the product responds to an international need.
From ISO’s website: International Standards assist in the operation of domestic markets, and also increase competitiveness and provide an excellent source of technology transfer. They play an integral role in the protection of consumers and the environment.
MCX is the only commodity exchange awarded three ISO certificates; in quality management, information security management systems, and environment management systems.
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