Efficiency and regulatory issues in gold derivative markets of India

Abstract

India is the world’s largest consumer of gold. Subsequent to the introduction of commodity Futures trading in India in 2003, the interest in Gold Futures trading has increased dramatically. From ground zero, the turnover at MCX has hit around Rupees 4,000 crores per day in July’06 contracts. The phenomenal increase is attributed to multiple factors including favorable policy environment coupled with attractive products from the commodity exchanges. Considering the many unique features of gold, its importance to India and its impact on the economy, there is heightened need for a detailed analysis of the markets and the policy framework in which it operates.