Finance Minister Arun Jaitley on Sunday launched options trading in guarseed on the commodity bourse NCDEX and asserted that the new initiative will benefit farmers and ensure better prices in the coming days.
Higher production has led to fall in prices of some agri-commodities in some places, he said, adding that options trading is one of the major steps towards taking farmers out of this situation.
NCDEX is the second exchange after MCX to launch options trading in commodities. In October 2017, MCX had launched gold options. Guarseed is the first agri-commodity options.
Options are derivatives which give a buyer the right but not the obligation to buy or sell an underlying asset or instrument at a specific price on or before a certain date.
“I hope this initiative will provide huge benefit to farmers in the coming days,” Jaitley said at the launch event.
Lauding the contribution of farmers, he said they have left no stone unturned to serve the nation. They have worked hard to turn a food shortage country to a surplus now. However, due to higher production, they are now faced with falling prices, he said.
“We see in some places the problem of falling prices because of higher production. Farmers are not getting the price for their produce. Many steps have been taken in the last few years to take farmers out of this situation. There has been some impact,” he said, adding that options trading is a step in that direction.
In the beginning, options trading may look like a small step but when its awareness increases in the coming days, it is will benefit farmers, he added.
Speaking on the occasion, NCDEX MD and CEO Samir Shah said, “The option trading is a powerful tool to hedge price risks…we are confident that this will boost the development of the agri-commodity market.”
Source: Economic Times