ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Old Style Speculation or Financialisation?

Futures Markets

The National Agricultural Policy announced in 2000 recognised “the role of the futures markets as one that would contribute to price discovery and would help in risk management by reducing volatility in the prices.” The rationale for futures markets is that they reduce uncertainty, but with the online trading system replacing the open outcry method, there has been a large flow of investment capital. On the one hand, liquidity is required for efficient functioning of the market and on the other, it may lead to excessive speculation, therefore defeating the objectives of price discovery and reduction in uncertainty. The analysis of futures markets begs the question with respect to agricultural commodity markets: are prices determined by real supply and demand or are they affected by financialisation and presence of speculators?



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Updated On : 13th Sep, 2017

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