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Plant Science Today (PST)

Review Articles

Vol. 12 No. 3 (2025)

Policy issues in commodity futures trading: A critical review

DOI
https://doi.org/10.14719/pst.9264
Submitted
2 May 2025
Published
30-06-2025 — Updated on 03-07-2025
Versions

Abstract

Commodity futures trading plays a vital role in today's financial markets by facilitating price discovery and price risk management. However, in India, commodity futures trading faces several challenges, including issues related to trading, price discovery, price risk management, hedging, speculation and the regulatory environment. These challenges hinder the sustainable growth of the futures markets in the country. The paper specifically aims to critically review the challenges faced by commodity futures trading and the resulting consequences for stakeholders. The review is expected to provide insights into potential policy measures that could improve the efficiency and effectiveness of commodity futures markets in India. Additionally, price discovery in Indian commodity futures is often influenced by external factors, including global price fluctuations, making it difficult for market participants to rely solely on domestic futures contracts. By analysing these issues, the study offers insights into policy interventions and regulatory frameworks that could enhance market efficiency, encourage participation and improve the overall functioning of commodity futures trading in India. This study also serves as a valuable resource for policymakers and stakeholders, supporting more informed decision-making and aiding in the development of an optimal regulatory approach. Addressing these challenges is essential for fostering a transparent and well-functioning commodity futures market that benefits the stakeholders. Strengthening regulatory mechanisms and improving market infrastructure can significantly enhance the long-term growth and sustainability of the sector.

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