MCX creates Awareness on Price Risk Management in Odisha through Educational Seminars

Jajpur/Angul/Koraput (Odisha), April 4, 2016: Multi Commodity Exchange of India Ltd (MCX) organized a series of commodity awareness programmes in Odisha—Jajpur, Angul, and Koraput—last month. These programmes were jointly organized with various associations, such as Chamber of Commerce Jajpur; Angul District Chamber of Commerce, and Koraput Jewellers Association respectively.

Through these awareness programmes, officials from MCX aimed at providing commodity value chain participants including the associations’ members in the regions with a greater understanding and importance of the commodity futures market in India, and how the futures contracts offered by commodity exchanges such as MCX can be used to mitigate price risk.

During the seminars, there were various sessions and presentations on Introduction to Commodity Derivatives, Benefits of Hedging, History of Commodity Derivatives Markets, Regulation, and Economic Benefits of Commodity Derivatives, among others.

In a presentation on price risk management, Mr. Vibhor Tandon, Assistant Vice President-Business Development, MCXsaid, “Commodity derivatives are one of the most cost-effective tools to manage the impact of volatility in commodity prices, which is comparable to the concept of insurance. Just as insurance offers financial cover against specified risks, hedging offers producers, consumers, traders, and all other stakeholders a financial cover against the risk of commodity price fluctuations.”

“By offering standardized derivative contracts and being counterparty to every trade, a commodity derivative exchange such as MCX not only helps its participants to reduce risks arising from price fluctuations, but also offers safety and surety of the trade itself”, Mr. Tandon added.

The associations’ heads unanimously opined that “Effective management of commodity price exposures, in the trending volatile market conditions, is of prime importance for market participants like us. And, especially in smaller cities such as Angul, Koraput and Jajpur, where the market participants still lack awareness about price risk management, MCX is doing a great job by empowering them through educational seminars, thus giving them the sanguinity to hedge price risk.