No proof that commodity derivatives trade causes price spikes, finds study

A study conducted on behalf of NCDEX Investor Protection Fund of two commodities on which futures trading is banned found no evidence that derivatives trading led to higher prices or that suspension of their futures brought down price volatility.

The study, done on mustard oil and chana by Prof Nidhi Agarwal from IIM-Udaipur, Tirtha Chatterjee of Jindal School of Government and Public Policy and research scholar Karan Sehgal found price movement in commodities with no futures is uncontrolled and likely to be more volatile than commodities that have a footprint in the derivatives segment, as they are bound by position limits, margin requirements and daily price caps.

The study was released on Tuesday in the presence of Ashok Dalwai, CEO,