For liberal norms for commodity options
It is welcome that the Securities and Exchange Board of India (Sebi) has decided, in principle, to let commodity (वस्तु, सामान) exchanges introduce trading in options. Such contracts, bought for a price called the premium, give their holders the right to buy or sell a security at a predetermined (पूर्व-निर्धारित) price.
We need both futures and options to better manage supply and demand and attendant (परिचर, सहायक) commodity prices. Yet, the fact is that a host of rigidities and anomalies (विसंगतियां) constrain (विवश/मजबूर) and stultify (मूर्ख बनाना) the commodities market here, and keep it functioning below potential.
The world over, commodities are recognised as an asset class. Sebi has now given its nod to launch future contracts in six new items, including diamonds, tea and eggs, bringing the number of such notified items to 91. Yet, futures trading stands curtailed, (सीमित/कटौती) in terms of who can trade and in what commodities. Futures are banned, for example, in tur and urad dal and rice.
Banks and mutual funds cannot trade in commodity derivatives. Regulated warehouses, whose receipts are negotiable instruments, must proliferate (तादाद में बढना) . Also, to deepen and widen the market, foreign investors must be allowed in.
There’s also the need to rationalise (औचित्य सिद्ध करना) trading margins and position limits. Further, there’s the need to permit over-the-counter contracts (OTC) in commodity derivatives, and also make way for cash settlement of index-like products in the asset class. Besides, we need foolproof transparency when it comes to sharing of information with brokers and traders.
The way forward is demutualisation and corporatisation of all recognised commodity associations. A vibrant (जीवंत) derivatives market would mean better instruments to manage prices and supplies of both agricultural and other commodities and better distribution of risk across society.
Commodity (N):
A useful or valuable thing. (वस्तु, सामान)
Synonyms: Product, Goods, Article, Ware
Example: But because Country X is so poor, its citizens can't afford this expensive crop, so the farmers sell this commodity on the international market to the highest bidder.
Predetermined (V):
Established or decided in advance. (पूर्व-निर्धारित)
Synonyms: Planned, Settled, Fixed
Example: Fate is not predetermined anyway.
Constrain (V)
Compel or force (someone) to follow a particular course of action. (विवश/मजबूर)
Synonyms: Bind, Ban, Curb
Example: We had to terminate the project due to time constraints.
Anomaly (N):
Something that deviates from what is standard, normal, or expected. (विसंगतियां)
Synonyms: Irregularity, Inconsistency, Deviation
Example: The final line of the article vowed to pursue the anomaly in coming additions.
Stultify (V):
Cause (someone) to appear foolish or absurd. (मूर्ख बनाना)
Synonyms: Mock, Make A Fool Of, Make Absurd
Example: By referencing actual statistics, he was able to stultify his opponent’s argument.
Curtailed (V):
Reduce in extent or quantity; impose a restriction on. (सीमित/कटौती)
Synonyms: Reduce, Trim, Slash
Example: Until 1878 the forests were almost neglected; afterwards, the government was forced to levy a graduated tax on goats, owing to the damage they inflicted upon young trees, and to curtail the popular rights of cutting timber and fir-wood and of pasturage.
Proliferate (V)
Increase rapidly in number; multiply. तादाद में बढना
Synonyms: Escalate, Generate, Reproduce
Example: As problems with the business continued to proliferate Edward decided to chuck it all and go into retirement.
Rationalise (V)
Attempt to explain or justify (behaviour or an attitude) with logical reasons, even if these are not appropriate. औचित्य सिद्ध करना
Synonyms: Clarify, Justification
Example: After the Renaissance, with its renewal of interest in Platonic studies, numerous attempts were made to rationalize the myth of Atlantis.
Vibrant (Ad)
Full of energy and life. जीवंत
Synonyms: Active, Lively, Dynamic
Example: She showed vibrant enthusiasm in the work.
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