RESEARCH PROPOSAL

On
A Study on Emerging Trends in Futures and Forwards
Market with reference to Commodity Market

Name of the Candidate: P.S.Bala Ram

Name of the Supervisor: Dr. G.Srinivasa Rao

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 RESEARCH PROPOSAL
A study on Emerging Trends in Futures and Forwards Market with reference to Commodity Market
Name of the Candidate: P.S.BalaRam

Place of Research Work and organization: Aditya P.G. College, Kakinada.

Proposed Supervisor Details:

Name: Dr. G. Srinivasa Rao
Qualification: M.Sc., M.B.A., M.Phil, PGDCA, Ph.D.
Designation: Professor and Principal
Organization: Aditya P.G. College, Kakinada.
Proposed Topic of Research: A study on Emerging Trends in Futures and Forwards Market with reference to
Commodity Market
(1)Statement of the Problem:
Organized futures market evolved in India by the setting up of "Bombay Cotton Trade
Association Ltd." in 1875. In 1893, following widespread discontent amongst leading Cotton Mill owners
and merchants over the functioning of the Bombay Cotton Trade Association, a separate association by the
name Bombay Cotton Exchange Ltd was constituted.
Futures trading in oilseeds was organised in India for the first time with the setting up of
Gujarati Vyapari Mandali in 1900, which carried on futures trading in groundnut, castor seed and cotton.
Before the Second World War broke out in 1939 several futures markets in oilseeds were functioning in
Gujarat and Punjab.
Futures trading in Raw Jute and Jute Goods began in Calcutta with the establishment of the
Calcutta Hessian Exchange Ltd., in 1919. Later East Indian Jute Association Ltd. was set up in 1927 for
organizing futures trading in Raw Jute. These two associations amalgamated in 1945 to form the present
East India Jute & Hessian Ltd., to conduct organised trading in both Raw Jute and Jute goods.
In case of wheat, futures markets were in existence at several centres at Punjab and U.P. The
most notable amongst them was the Chamber of Commerce at Hapur, which was established in 1913.
Other markets were located at Amritsar, Moga, Ludhiana, Jalandhar, Fazilka, Dhuri, Barnala and Bhatinda
in Punjab and Muzaffarnagar, Chandausi, Meerut, Saharanpur, Hathras, Gaziabad, Sikenderabad and
Barielly in U.P.
Futures market in Bullion began at Mumbai in 1920 and later similar markets came up at
Rajkot , Jaipur, Jamnagar , Kanpur, Delhi and Calcutta. In due course several other exchanges were also
created in the country to trade in such diverse commodities as pepper, turmeric, potato, sugar and gur

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(jaggory). After independence, the Constitution of India brought the subject of "Stock Exchanges and
futures markets" in the Union list.
As a result, the responsibility for regulation of commodity futures markets devolved on Govt.
of India. A Bill on forward contracts was referred to an expert committee headed by Prof. A.D. Shroff and
Select Committees of two successive Parliaments and finally in December 1952 Forward Contracts
(Regulation) Act, 1952, was enacted.

The Act provided for 3-tier regulatory system;

(a) An association recognized by the Government of India on the recommendation of Forward Markets
Commission,
(b) The Forward Markets Commission (it was set up in September 1953) and
(c) The Central Government.
Forward Contracts (Regulation) Rules were notified by the Central Government in July 1954
The Act divides the commodities into 3 categories with reference to extent of regulation, viz:
(a) The commodities in which futures trading can be organised under the auspices of recognized
association.
(b) The Commodities in which futures trading is prohibited.
(c) Those commodities, which have neither been regulated for being traded under the recognized
association nor prohibited, are referred as Free Commodities and the association organised in such free
commodities is required to obtain the Certificate of Registration from the Forward Markets Commission.
In the seventies, most of the registered associations became inactive, as futures as well as forward
trading in the commodities for which they were registered came to be either suspended or prohibited
altogether.
The Khusro Committee (June 1980) had recommended reintroduction of futures trading in most of
the major commodities, including cotton, kapas, raw jute and jute goods and suggested that steps may be
taken for introducing futures trading in commodities, like potatoes, onions, etc. at appropriate time. The
government, accordingly initiated futures trading in Potato during the latter half of 1980 in quite a few
markets in Punjab and Uttar Pradesh. After the introduction of economic reforms since June 1991 and the
consequent gradual trade and industry liberalization in both the domestic and external sectors, the Govt. of
India appointed in June 1993 one more committee on Forward Markets under Chairmanship of Prof. K.N.
Kabra.
The Committee submitted its report in September 1994. The majority report of the Committee
recommended that futures trading be introduced in:

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 1) Basmati Rice
2) Cotton and Kapas
3) Raw Jute and Jute Goods
4) Groundnut, rapeseed/mustard seed, cottonseed, sesame seed, sunflower seed, safflower seed, copra and
soybean, and oils and oilcakes of all of them.
5) Rice bran oil
6) Castor oil and its oilcake
7) Linseed
8) Silver
9) Onions.

(2)Review of literature & List of proposed literature to be consulted / referred

In the last two decades, the futures markets have experienced a remarkable growth all over the world
in size, trading volume and accepted by the business community. New contracts with new products along
with entirely new possibilities in the futures markets have become the reality now. Most common
underlying assets used in futures market today are commodities, agricultural products, metals, energy
products, interest rates, foreign exchange etc. In India, it is traded 24 hours a day.

Forward Contract is a simple form of Derivative Contract. At the time the Forward contract is written,
a specified is fixed at which the asset is purchased or sold. The specified price is called as delivery price.
This delivery price is set such that the value of the forward contract is zero at the time of its formation .The
following books and reports can be useful for better understanding the concepts in Futures and Forwards.
(3)Need For the Study

In recent times the derivative markets have gained importance in terms of their vital role in the
economy.

The increasing investments in derivatives (overseas as well as domestic) have attracted my interest in
this area. Through the use of derivative products, it is possible to partially or fully transfer price risks by
locking-in asset prices. As the volume of trading is tremendously increasing in derivatives market, this
analysis will be of immense help to the investors.

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(4)Objectives of the Study
To analyse the operations of Futures and Forwards
To find out the profit/loss position of the Buyers and Sellers
To study about risk management in order to minimize the risk
To study the role of Futures and Forwards in Indian Financial System
To study the role of Stock Exchanges regarding the functioning of Futures and Forwards

(5) Scope of the Study

The study may be limited to pay the concentration only on Futures and Forwards, which are the
parts of Derivatives Market. The study cannot be said as totally perfect, any alteration may come.
The study may be only on Futures and Forwards markets, applicable only in Indian Context.
(6) Proposed Research Methodology

Data can be collected in two different ways i.e., Primary Data and Secondary Data.

Primary data includes:

Data can be directly collected from the stock brokers

Secondary data includes:

Various Statistical Tools can be applied to get the accuracy.

Software packages, various finance journals can give the relevant information to make my study more
effective.

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 References:

Gargi Parsai (10 September 2013). "Forward Markets Commission comes under Finance Ministry".
The Hindu

Robert W. Kolb Financial Derivatives, John Wiley & Sons, James A. Overdahl New Jersey. 2003

S.L. Gupta, Prentice. Financial Derivatives (Theory, Concepts and Problems), Hill of India, New
Delhi, 2006

S.S.S. Kumar Financial Derivatives, Prentice Learning Pvt. Ltd. New Delhi, 2008

Ministry of Consumer Affairs, Food and Public Distribution (2008) Report of the Expert Committee
to study the impact of futures trading on agricultural commodity price.

Other References:

b) "Highlights/ Important Developments for the fortnight from 1.7.2014 to 15.7.2014" (PDF). FMC. 15
July 2014

c) "Finance Minister unveils merger of FMC with SEBI". Securities and Exchange Board of India.
Retrieved14 October 2015.

d) Gargi Parsai (10 September 2013). "Forward Markets Commission comes under Finance Ministry".
The Hindu

e)Finance Ministry to oversee Forward Markets Commission". Hindu Business Line. 10 September 2013.

Signatures:

(Mr. P.S.BALARAM) (Dr. G. Srinivasa Rao)

CANDIDATE GUIDE

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 STATEMENT OF PURPOSE

Name of Applicant : P.S.BALARAM

Department : COMMERCE AND MANAGEMENT

Degree sought : Doctoral Degree (Ph.D.)

I am very thankful for providing me this opportunity and it is with sincere sense of gratification that I
pen my brief statement of purpose. Pursuit of knowledge has always been my obsession and the propelling
force behind all my achievements. My decision to pursue doctoral study at your esteemed university blends
harmoniously with my eventual objective of taking up research oriented career in mathematics.

My strengths in quantitative and analytical abilities instilled in me a special interest towards

Commerce, which I have opted in my (10+2) M.E.C. Course and got through it with 73%. I have chosen
B.Com as my option of study. The undergraduate Curriculum in B.Com introduced me to a wide gamut of
subjects. It has helped me to get sound knowledge and a firm grasps over the principles underlying the course
of B.Com and has equipped me with the necessary pre-requisites for formal graduate course.

I have taken up Post graduation in M.Com with Accounts as my specialization.

My Postgraduate study in M.Com. exposed me to the different faces of analyzing the concepts. The course has
really helped me to hone my skills of understanding and analyzing the problems of mathematics from a
different perspective. My Postgraduate subjects in M.Com. (Accounts) held my interest in further study. The
course is highly appreciated and helped me in coming to qualify CA-Inter Compulsory Computer Training
Course with a distinction. In addition to that I passed MBA (Banking and Finance) from Alagappa University
and PGDFM from All India Institute of Management Studies (AIIMA), Chennai. In addition to that, I
qualified M.Phil from Vinayaka Missions University and I selected as a faculty in Finance Discipline from
CIMA (Chartered Institute of Management Accountants), Stratagem Financial School, Hyderabad.

Throughout my entire course of study right from the Junior College, I have been a keen participant in
extracurricular activities. All the years of study have been an enriching experience both academically and
otherwise. I am poised to maintain the high levels of excellence throughout my career.

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I started my career immediately after completion of my PG as a Faculty Member in Velangi Degree College,
Velangi. After that I have selected as an Assistant professor in Aditya P.G. College, Kakinada in 2007 and
achieved many things like best faculty, best Proctor . Also I got 100 percent results many times. I have been
the organizer of the Commerce Day and Conducting State Level Management Fests in the college. I have
published 7 papers in International journals of which two of them have impact factor 4.04. I have attended 6
workshops and Seminars at various places in Andhra Pradesh. My immediate degree objective is a Doctoral
degree in Futures and Forwards Market.
I wish to pursue a career in research, and experience the excitement and satisfaction of being at the
forefront of this vast expanding field.
An extremely distinguished faculty, a milieu replete with academic activity and a doctoral program
which blends high quality course and research facilities at the cutting edge of every sub field are the factors
which have motivated me to choose your esteemed University for Doctoral studies. I believe the program
offered will help me to acquire the versatility needed to pursue my career in research.

It would therefore be privilege to be able to secure admission to pursue Doctoral studies at your
university. I am confident that my potential will be reflected in my work and I will be able to contribute
significantly to the excellent research work being carried out at the university and match the high standards set
by your university.

I earnestly look forward to this opportunity.

P.S.BALARAM