Is there any reasoning/logic provided for banning any futures markets? i.e. any explanation in general of how futures exacerbate inflation?
Not a good start?Dont you think its too polite, too charitable?My god, it was horibble from the word go. One more minister than the UPA-1, 15 days gone by just twiddling the thumbs and then when they start working they ban sugar futures.So much for "reforms on fast track" talkHave they got any amount of grey matter left in them?Disclaimer: As is evident, I am not a fan of this party. So please overlook the rant.
Lol.. why would you expect a different movie from the same set of characters? In all seriousness though, where do you stand on the argument that speculators/traders exacerbate extreme prices in commodity markets?
It is very sad that the futures market has been linked with increased prices. Now every time there is a rise in prices, the futures market will be blamed. There is already pressure from people like Laloo to ban futures if the price increases. Is there any analysis showing otherwise?
Here is an angle.
@vivek and @drajay and everybody else,Does ban on short selling stop the stock prices from falling?On a similar vein, do banning futures stop the prices from rising?[I think it is even more detrimental because transparency just took a beating]On a tangent, do placing a circuit levels help?What about one sided circuit levels[reasoning that panic is more infectious than greed]Just some questions. SohamP.S: My opinions 1. No 2. No. 3. Never
Is this step related to drubbing the NCP has got in western Maharashtra? and the impending elections in MH just 5 months ahead.Cannot futures arrest the rise of sugar prices as against bolstering them?This did not get the attention it deserves due to the ongoing excitement over cabinet formation. Thanks to Ajay,this might generate some additional kilobytes and grams of newsprint.At least one would expect the market participants and market makers to not be a mute spectator to this nonsense. We dont even have the bogey of leftists now. Sharad Pawar should let his views(with facts) be known on:Q.What is the function of Futures market and should they be allowed at all?Q.What is the trigger point(Price rise/volume) when Futures market will wean his attention away from IPL and he will apply his breaks?Q.What is his ministry doing to shift the Sugar production from water deficit Maharashtra to Water rich Bihar?Q.Should we expect Sugar decontrol post elections in Maharashtra?Q.How exactly does the Sugar price rise affects the poor?The answer to these questions may lead to a more efficient futures market in commodities?This might be a fit case for RTI to understand the scholarly process followed in arriving at this enlightened decision.
I am trying my best to believe that a lack of grey matter is not at the forefront of this decision. So let me put forth a case where futures can potentially lead to overheating commodity prices. If there are no (or very thin) margins to post then I see incentive for a huge influx of speculation which can move a market by substantially increasing demand. I have no idea as to what these requirements actually are - but unfortunately the reuters type press only quote peoples views (most of which come across as slightly dogmatic), without any independent analysis or useful information, besides a short history of sugar production and prices.
Please note: Comments are moderated. Only civilised conversation is permitted on this blog. Criticising me is perfectly okay; uncivilised language is not. I delete any comment which is spam, has personal attacks against anyone, or uses foul language. I delete any comment which does not contribute to the intellectual discussion about the blog article in question.Please note: LaTeX mathematics works. This means that if you want to say $10 you have to say \$10.