Commodity Options: A Game Changer for Indian Farmers?
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In a major push to widen the scope of commodity derivatives market in India, Securities and Exchange Board of India (SEBI) has recently allowed options trading on commodity exchanges. This decision has been hailed by commodity exchanges as a game changer for Indian farmers. Tracing the experience of futures trading in the Indian commodity markets, the paper argues that the options trading is not suitable for Indian farmers as they lack the understanding, resources and capacities to trade in commodity derivatives. Since sophisticated traders and financial investors will use…