PARTICIPANTS IN DERIVATIVES MARKETS

The Bye-laws and Articles of the Association prescribed the criteria for being a member of the Exchange.  Any person desirous of being a member of the Exchange may approach the contact persons whose names, telephone numbers, fax numbers, email addresses etc. are available on the website of fmc: <http://www.fmc.gov.in/>. They may also refer to the Bye-law and Articles of Association of the concerned Exchange which contain various criteria for the membership of the Exchange.

Participants in forward/futures markets are hedgers, speculators, day-traders/scalpers, market makers, and, arbitrageurs.

Hedger is a user of the market, who enters into futures contract to manage the risk of adverse price fluctuation in respect of his existing or future asset.

Arbitrage refers to the simultaneous purchase and sale in two markets so that the selling price is higher than the buying price by more than the transaction cost, so that the arbitrageur makes risk-less profit.

Day traders are speculators who take positions in futures or options contracts and liquidate them prior to the close of the same trading day.

A floor trader is an Exchange member or employee, who executes trade by being personally present in the trading ring or pit floor trader has no place in electronic trading systems.

A trader, who trades or takes position without having exposure in the physical market, with the sole intention of earning profit is a speculator.

A market maker is a trader, who simultaneously quotes both bid and offer price for a same commodity throughout the trading session.

Credit risk on account of default by counter party: This is very low or almost zeros because the Exchange takes on the responsibility for the performance of contracts

Market risk is the risk of loss on account of adverse movement of price.

Liquidity risks is the risk that unwinding of transactions may be difficult, if the market is illiquid

Legal risk is that legal objections might be raised, regulatory framework might disallow some activities.

Operational risk is the risk arising out of some operational difficulties, like, failure of electricity, due to which it becomes difficult to operate in the market.