The commodity trading might be second in the ranking, which comes after the equity trading topping the list, but it is sure that with the growing desires for gold and silver, the commodity market is surely to top the list.
The commodity trading has started in India, long before it was started in any other countries. In fact, India had established three national commodity exchanges in the very earlier stages; the exchanges are described, as follows:
Multi Commodity Exchange (MCX)
This exchange is been established in the year 2003 with an objective to enhance the online trading of the commodities and to facilitate the commodity trading in the country. It offers more than 40 commodities, which includes, agricultural products; ferrous and non-ferrous metals; bullion like silver; gold, etc…; spices like, cardamom, coriander; pulses; rubber; oil, etc…
National Commodity and Derivatives Exchange (NCDEX)
This comprises the products, such as, rubber; furnace oil; crude oil; gold; silver; spices, etc… thereby constituting around 57 commodities. It is been established under the ‘Companies Act’ in the year 2003.
National Multi-Commodity Exchange
This offers three types of trades, namely, spot trades; cash trades and weekly trades. It offers the products, which ranges from oil, spices to precious metals, etc… the cash trade involves trading for one hour in a day and settlement made at the end of the same day, whereas the spot trade involves the trading for two hours a day and the settlement is made on the third day; the weekly trade involves trading through the prescribed hours, as designed by the exchange, for which the settlement is made on the 5th day from the actual date of transaction. Thus with the regulation of these exchanges, the government has facilitated the buying and selling of the commodities, without the physical presence of the stocks. This clearly shows that the government has taken serious steps in enhancing the commodity trading in the country, as it is one of the leading factors, which is boosting up the economic growth of the country, every year. All these exchanges are established and regulated by the authority ‘Forward Markets Commission (FMC)’, which was established under the supervision of Ministry of Consumer Affairs in the year 1953. It governs and controls the account of other recognized or registered organizations associated in the commodity trading; it also advices the government regarding the amendment of the necessary changes in order to enhance the market condition.
In India the commodity market constitute around 58% of the country’s total GDP of about 13, 20, 700 crore and the commodity market shares are twice bigger, than the equity market shares. This is because, in India people are really crazy about investing in commodities like oil, energy products, etc., especially on gold and silver. Thus, during the economical crisis, when the price for the gold and silver increased, the buying power of Indian people still increased. India did suffer in the commodity trading due to the economic crisis, but it is slowly recovering in the trading sectors. There are multiple private equity brokers, who are also offering commodity trading services, online; namely, Sharekhan; ICICI commodity trade; ISJ Securities, etc… but it is advisable to check their associations with the government regulated exchanges. Then you could narrow down the list of selected brokers (agencies), by considering various factors, such as, broker commission; customer support; network speed; availability, etc.