Icicidirect options brokerage
For retail investors could have done very little to actually invest in commodities such as gold and silver -- or oilseeds in the futures market. This was nearly impossible in commodities except for gold and silver as there was practically no retail avenue for punting in commodities. However, with the setting up of three multi-commodity exchanges in the country, retail investors can now trade in commodity futures without having physical stocks! Commodities actually offer immense potential to become icicidirect separate asset class for market-savvy investors, arbitrageurs and speculators. Retail investors, who claim to understand the equity markets may find commodities an unfathomable market. But commodities are easy to understand as far as fundamentals of demand and supply are concerned. Retail investors should understand the risks and advantages of trading in commodities futures before taking a leap. Historically, pricing in commodities futures has been less volatile compared with equity and bonds, thus providing an efficient portfolio diversification option. In fact, the size of the commodities markets in India is also quite significant. Currently, the various commodities across the country clock an annual turnover of Rs 1,40,000 crore Rs 1,400 billion. With the introduction of futures trading, the size of the commodities market options many folds here on. Like any other market, the one for commodity futures plays a valuable role in information pooling and risk sharing. The market mediates between buyers and sellers brokerage commodities, and facilitates decisions related to storage and consumption of commodities. In the process, they make the underlying market more liquid. You have three options - the National Commodity and Derivative Exchange, the Multi Commodity Exchange of India Ltd and the National Multi Commodity Exchange of India Ltd. All three have electronic trading and settlement systems and a national presence. Several already-established equity brokers have sought membership with NCDEX and MCX. The likes of Refco Sify Options, SSKI Sharekhan and ICICIcommtrade ICICIdirectISJ Comdesk ISJ Securities and Sunidhi Consultancy are already offering commodity futures services. Some of them also offer trading through Internet just like the way they offer equities You can also get a list of more members from the respective exchanges and decide upon the broker you want to choose from. You can have an amount as low as Rs 5, All you need is money for margins payable upfront to exchanges through brokers The margins range from per cent of the value of the commodity contract. While you can start off trading at Rs 5, with ISJ Commtrade other brokers have different packages for clients. For trading in bullion, that is, gold and silver, the minimum amount required is Rs and Rs for on the current price of approximately Rs 65,00 for gold for one trading unit gm and about Rs 9,500 for silver one kg. The prices and trading lots in agricultural commodities vary from exchange to exchange in kg, quintals or tonnesbut again the minimum funds required to begin will be approximately RsYou can do both. All the exchanges have both systems - cash and delivery mechanisms. The choice is yours. If you plan to take or make delivery, you need to have the required warehouse receipts. The option to settle in cash or through delivery can be changed as many times as one wants till the last day of the expiry of the contract. As of now you will need only one bank account. You will need a separate commodity demat account from the National Securities Brokerage Ltd to trade on the NCDEX icicidirect like in stocks. You will have to enter into a normal account agreements with the broker. These include the procedure of the Know Your Client format that exist in equity trading and terms of conditions of the exchanges and broker. Besides you will need to give you details such as PAN no. The brokerage charges range from per cent of the contract value. The brokerage will be different for different commodities. It will also differ based on trading transactions and delivery transactions. In case of a contract resulting in delivery, the brokerage can be per cent of the contract value. The brokerage cannot exceed the maximum limit specified by the exchanges. Daily financial newspapers carry spot prices and relevant news and articles on most commodities. Besides, there are brokerage magazines on agricultural commodities and metals available for subscription. Brokers also provide research and analysis support. But the information easiest to access is from websites Though many websites are subscription-based, a few also offer information for free. You can surf the web and narrow down you search. The exchanges are regulated by the Forward Markets Commission. The FMC deals with exchange administration and will seek to inspect the books of brokers only if foul practices are suspected or if the exchanges themselves fail to take action. In a sense, therefore, the commodity exchanges are more self-regulating than stock exchanges. But this could change if retail participation in commodities grows substantially. The commodities market will have three broad categories of market participants apart from brokers and the exchange administration - hedgers, speculators and arbitrageurs. Brokers will intermediate, facilitating hedgers and speculators. Hedgers are essentially players with an underlying risk in a commodity - they may be either producers or consumers who want to transfer the price-risk onto the market. Producer-hedgers are those who want to mitigate the risk of prices declining by the time they actually produce their commodity for sale in the market; consumer hedgers would want to do the opposite. For example, if you are a jewellery company with export orders at fixed prices, you might want to buy gold futures to lock into current prices. Investors and traders wanting to benefit or profit from price variations are essentially speculators. They serve as counterparties to hedgers and accept the risk offered by the hedgers in a bid to gain from favourable price changes. Though the government has essentially made almost all commodities eligible for futures trading, the nationwide exchanges have earmarked only a select few for starters. While the NMCE has most major agricultural commodities and metals under its fold, options NCDEX, has a large number of agriculturemetal and energy commodities. MCX also offers many commodities for futures trading. If the trade is squared off no sales tax is applicable The sales tax is applicable only in case of trade resulting into delivery. The sales tax is applicable at the place of delivery. Those who are willing to opt for physical delivery need icicidirect have sales tax registration number. Both the exchanges, NCDEX and MCX, maintain settlement guarantee funds. The exchanges have a penalty clause in case of any default by any member. There is also a separate arbitration panel of exchanges. In case of delivery, the margin during the delivery period increases to per cent of the contract value. As of now, there is no stamp duty applicable for commodity futures that have contract notes generated in electronic form However, in case of delivery, the stamp duty will be applicable according to the prescribed laws of the state the investor trades in. This is applicable in similar fashion as in stock market. As in stocks, in commodities also the margin is calculated by value at risk VaR system. Normally it is between 5 per cent and 10 per cent of the contract value. The margin is different for each commodity. Just like in equities, in commodities also there is a system of initial margin and mark-to-market margin. The margin keeps changing depending on the change in price and volatility. Yes the exchanges have circuit filters in place. The filters vary from commodity to commodity but the maximum individual commodity circuit filter is 6 per cent. The price of any commodity that fluctuates either way beyond its limit will immediately call for circuit breaker. Interested in commodities futures trading? Day Trading Day Trading is a process of capturing Intra-Day Volatility in highly liquid Stock and Index Futures! This was nearly impossible in commodities except for gold and silver as there was practically no retail avenue for punting in commodities However, with brokerage setting up of three multi-commodity exchanges in the country, retail investors can now trade in commodity futures without having physical stocks! Historically, pricing in commodities futures has been less volatile compared with equity and bonds, thus providing an efficient portfolio diversification option In fact, the size of the commodities markets in India is also quite significant. With the introduction of futures trading, the size of the commodities market grow many folds here on Like any other market, the one for commodity futures plays a valuable role in information pooling and risk sharing. All three have electronic trading and settlement systems and a national presence How do I choose my broker? Some of them also offer trading through Internet just like the way they offer equities You can also get a list of more members from the respective exchanges and decide upon the broker you want to choose from What is the minimum investment needed? While you can start off trading at Rs 5, with ISJ Commtrade other brokers have different packages for clients For trading in bullion, that is, gold and silver, the minimum amount required is Rs and Rs for on the current price of approximately Rs 65,00 for gold for one trading unit gm and about Rs 9,500 for silver one kg The prices and trading lots in agricultural commodities vary from exchange to exchange in kg, quintals options tonnesbut again the minimum funds required to begin will be approximately RsDo I have to give delivery or settle in cash? You can do both. The option to settle in cash or through delivery can be changed as many times as one wants till the last day of the expiry of the contract What do I need to start trading in commodity futures? You will need a separate commodity demat account from the National Securities Depository Ltd to trade on the NCDEX just like in stocks What are the other requirements at broker level? The brokerage cannot exceed the maximum limit specified by the exchanges Where do I look for information on commodities? Brokers also provide research and analysis support But the information easiest to access is from websites Though many websites are subscription-based, a few also offer information for free. You can surf the web and narrow down you search Who is the regulator? But this could change if retail participation in commodities grows substantially Who are the players in commodity derivatives? Brokers will intermediate, facilitating hedgers and speculators Hedgers are essentially players with an underlying risk in a commodity - they may be either producers or consumers who want to transfer the price-risk onto the market Producer-hedgers are those who want to mitigate the risk of prices declining by the time they actually produce their commodity for sale in the market; consumer hedgers would want to do the opposite For example, if you are a jewellery company with export orders at fixed prices, you might want to buy gold futures to lock into current prices. They serve as counterparties to hedgers and accept the risk offered by the hedgers in a bid to icicidirect from favourable price changes In which commodities can I trade? MCX also offers many commodities for futures trading Do I have to pay sales tax on all trades? Those who are willing to opt for physical delivery need to have sales tax registration number What happens if there is any default? What are the stamp duty rates? This is applicable in similar fashion as in stock market How much margin is applicable in the commodities market? Normally it is between 5 per cent and 10 per cent of the contract value The margin is different for each commodity. The margin keeps changing depending on the change in price and volatility Are there circuit filters? The price of any commodity that fluctuates either way beyond its limit will immediately call for circuit breaker Interested in commodities futures trading? Any action you choose to take in the markets is totally your own responsibility. This information is neither an offer to sell nor solicitation to buy any of the securities mentioned herein. Home Contact Us About Us About Futures Why Trade Futures?
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