Major Commodities Traded in Derivatives Exchanges in India

The commodity derivatives market in India is operated by four recognised exchanges – MCX, NCDEX, ICEX and NMCE. These platforms provide futures and options contracts that enable price discovery, hedging and speculation across a wide range of physical commodities.

Market depth is driven primarily by agricultural produce, base metals and energy products. According to the latest SEBI data, agricultural contracts account for roughly 45 % of total open interest, metals 35 % and energy 20 %.

For the NISM exam, candidates must know not only the commodity names but also the exchange on which they trade, because questions often ask to match a commodity with its exchange or contract size.

• Key exchanges: MCX (metals & energy), NCDEX (agri), ICEX (agri), NMCE (agri).
• Derivatives include futures (standardised) and options (standardised).

Indian commodity derivatives are grouped into three broad categories – Agricultural, Metal and Energy. Each category follows a distinct set of contract specifications that reflect the physical characteristics of the underlying commodity.

Agricultural commodities are seasonal, perishable and often have quality grades (e.g., No. 1, No. 2). Metal contracts are defined by weight (kilograms or metric tonnes) and purity. Energy contracts are measured in metric tonnes for coal or barrels for crude oil equivalents.

The exam frequently tests the candidate’s ability to differentiate these categories, especially when evaluating margin requirements or delivery procedures.

• Agricultural – wheat, soybean, spices, etc.
• Metal – gold, silver, copper, aluminium.
• Energy – crude oil, natural gas, coal.

National Commodity & Derivatives Exchange (NCDEX) and Indian Commodity Exchange (ICEX) dominate the trading of agricultural futures. The most liquid contracts include Wheat, Soybean, Mustard Oil, Spices (e.g., Cardamom) and Copra.

Contract sizes are expressed in metric tonnes (MT). For example, a Wheat contract on NCDEX is 5 MT, while a Mustard Oil contract on ICEX is 1 MT. Tick size – the minimum price movement – varies: Wheat has a tick of ₹0.05 per kg, whereas Cardamom’s tick is ₹0.10 per kg.

Exam questions often ask for the lot size or tick size of a specific agri commodity, so memorising the most common ones is a high‑yield strategy.

The Multi Commodity Exchange (MCX) is the primary venue for metal futures. The flagship contracts are Gold, Silver, Copper, Aluminium and Nickel.

Gold and Silver contracts are quoted per 10 g and 1 kg respectively, while base‑metal contracts use kilograms (e.g., 5 kg for Copper). Tick sizes are ₹0.05 per gram for Gold and ₹0.01 per kg for Copper, reflecting the high price volatility of precious metals versus base metals.

In the exam, a common trap is to confuse the contract unit of Gold (10 g) with the spot price unit (per gram). Remember: the futures contract size is fixed by the exchange.

Energy contracts on MCX include Crude Oil, Natural Gas and Coal. Crude Oil futures are denominated in metric tonnes, with a standard lot of 1 MT, while Natural Gas is quoted per 10 MMBtu.

Coal contracts have a lot size of 1 MT and a tick size of ₹0.50 per kg. Because energy prices are influenced by global benchmarks, the exam may ask you to identify the reference price (e.g., Brent for Crude Oil) used for Indian futures.

Understanding the unit of measurement is critical; a mistake in unit conversion can lead to a wrong answer on contract‑value calculations.

All Indian commodity exchanges follow a uniform trading window from 09:00 hrs to 23:30 hrs IST, with a lunch break between 13:30 hrs and 14:00 hrs. The market operates on a T+0 settlement for cash‑settled contracts and T+2 for physically settled contracts.

Physical delivery is mandatory for a small percentage (typically 5‑10 %) of the open interest, ensuring that the futures market remains linked to the underlying commodity market. The remaining contracts are cash‑settled based on the daily settlement price published by the exchange.

Exam takers should remember the distinction between cash‑settlement and physical delivery, as questions often test the impact on margin and delivery obligations.

Participants use a variety of risk‑mitigation techniques, including stop‑loss orders, position limits, and margin requirements set by SEBI. The margin system follows a SPAN (Standard Portfolio Analysis of Risk) methodology, which calculates the worst‑case loss across a portfolio.

Hedgers, such as farmers or manufacturers, typically take opposite positions to lock in future prices, while speculators aim to profit from price movements. Understanding who is likely to be a hedger versus a speculator can help answer scenario‑based questions.

Common exam pitfalls involve confusing initial margin with exposure margin; the former is the upfront amount, while the latter reflects the potential loss after market moves.

SEBI (Securities and Exchange Board of India) regulates all commodity derivatives activities, issuing guidelines on market integrity, position limits, and disclosure norms. NISM (National Institute of Securities Markets) designs the certification exam to ensure market participants understand these rules.

Key regulations include the requirement for a minimum net‑worth for commodity brokers, mandatory reporting of large positions (above 5 % of open interest), and the implementation of a risk‑based margin system. Failure to comply can lead to penalties, which are sometimes asked in scenario‑based questions.

For the exam, remember the distinction between SEBI’s supervisory role and NISM’s educational role. Questions may ask which body issues the contract specifications – the answer is the exchange, but SEBI approves the framework.