{"id":4213,"date":"2023-01-24T07:15:52","date_gmt":"2023-01-24T01:45:52","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=4213"},"modified":"2025-03-26T22:33:03","modified_gmt":"2025-03-26T17:03:03","slug":"derivatives-trading","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/derivatives-trading\/","title":{"rendered":"Derivatives Trading"},"content":{"rendered":"<h2><strong>Why in news?<\/strong><\/h2>\n<ul>\n<li>On December 20, 2021, the capital markets regulator suspended futures trading in seven commodities, viz., wheat, paddy (non-basmati), moong, chana, soybean and its derivatives, mustard seed and its derivatives, and palm oil and its derivatives on the exchanges.<\/li>\n<li>The trading was initially suspended for a year, but in December 2022, the ban was extended for another year, i.e., until December 20, 2023.\u00a0<\/li>\n<\/ul>\n<h3><strong>What is derivative trading in commodities?\u00a0<\/strong><\/h3>\n<ul>\n<li>The derivatives are short-term financial contracts that are bought and sold in the market.<\/li>\n<li>\u00a0Profits are made in the derivatives trade by predicting the price movements of the asset that underlies the contract.\u00a0<\/li>\n<li>The derivatives trade can be in <strong>futures and options.<\/strong><\/li>\n<li>In a futures contract, a supplier pledges to sell a certain quantity at a fixed price at a future date.\u00a0<\/li>\n<li>An option is a derivative contract which gives the buyer (the owner or holder of the option) the right, but not the obligation, to buy or sell an underlying asset.<\/li>\n<li>Farmers can put fixed amounts of their products, which fit the quality standards of the exchange, to be sold at a fixed price \u2014 almost like price insurance.\u00a0<\/li>\n<li>These contracts can be exited by either the producer or the trader by paying a margin price to the exchange.<\/li>\n<li>Agricultural commodities like cotton, paddy, soya bean, soya oil, mustard seed, etc., are traded on the <strong>National Commodities and Derivatives Exchange (NCDEX) and the Multi Commodity Exchange (MCX).<\/strong><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3>Q1)\u00a0What is National Stock Exchange of India Limited?<\/h3>\n<p>The National Stock Exchange of India Limited (NSE) is India&#8217;s largest financial market. Incorporated in 1992, the NSE has developed into a sophisticated, electronic market, which ranked fourth in the world by equity trading volume.<\/p>\n<p><strong>Source:<\/strong>\u00a0<a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-politics\/sebi-ban-agri-commodities-trade-farmers-8399662\/\" target=\"_blank\" rel=\"nofollow noopener\"><u>SEBI ban on Agri commodities trade: Why farmers are protesting against the regulator in Mumbai<\/u><\/a><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The derivatives are short-term financial contracts that are bought and sold in the market.<\/p>\n","protected":false},"author":5,"featured_media":4214,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-4213","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/4213","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=4213"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/4213\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/4214"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=4213"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=4213"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=4213"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}