Factors Affecting Success and Failure of Futures Contracts

Topics: Futures contract, Chicago Board of Trade, Futures exchange Pages: 50 (16664 words) Published: June 25, 2012

Owais Javaid Qureshi {321}
MFC Batch 2010-12
Under the guidance of
Dr. Nilanjan Ghosh
Sr. Vice President and Head, Research and Strategy, MCX
Submitted in the partial requirements for the Degree of Masters in Finance & Control Department Of Business & Financial Studies
University Of Kashmir

This is to certify that the project entitled “Factors Affecting the Success and Failure of Futures Contracts” is research work done by Owais Javaid Qureshi, under my supervision, during March-April, 2012, submitted to the Department Of Business and Financial Studies, University Of Kashmir in partial fulfillment for the award of the Degree of Masters in Finance & Control

Dr. Nilanjan Ghosh
Sr. Vice President & Head
MCX Research & Strategy
Exchange Square, Suren Road, Chakala, Mumbai, 400093


I thank Multi Commodity Exchange (MCX) for providing me with this wonderful opportunity by offering a summer Internship in their organization. I would like to thank Dr. Nilanjan Gosh, Sr. Vice President, and Head, Research & Strategy, MCX, for his support & encouragement during the course of internship at MCX. The special thank goes to my helpful supervisors, Mr. Niteen Jain and Mr. Nazir Moulvi. The supervision and support that they provided greatly helped me in smoothing the whole internship program. The help and support is highly appreciated. My grateful thanks also go to Mr. Debojyoti Dey, for the constant guidance and help. I would also like to thank Meenakshi Rokade, Sr. Executive Research & Strategy, and In-charge Library, for providing me with the literature & other necessary items as and when they were required.

Owais Javaid Qureshi
Department of Business & Financial Studies
University of Kashmir

Table of Contents


Company Profile:5

Background Of the study:6
Few popular types of derivative contracts:7

Factors Affecting the success and failure of futures contracts: Literature Review8


Methodology Employed by different papers:43



“Commodity futures contracts are a very important segment of the financial markets in today’s world. They have come a long way from being bilaterally traded in the remote corners of Chicago to be hotly contested in the exchanges today. In fact the numbers as well as the type of commodities traded have changed drastically. Today both the buyers as well as the sellers are anonymous to each other. In spite of a robust growth, there are still some of the contracts that fail to achieve a minimum level of participation. A successful contract is primarily the one which can achieve sufficient liquidity so that the participants have the ease in moving in & out of the contract as per their convenience. Liquidity however is not the only determining characteristic that defines a contract success; there are others that have been used by various authors depending upon the nature of their studies. The paper is an attempt to gather the literature that has been compiled by various experts on the subject, as to what are the various factors that make or mar a futures contract. An understanding of such factors should help in devising better contracts to be put forward for trading which would in turn increase the efficiency of the markets and help in the overall growth of the economy (both domestic as well as global)”.

Company Profile:
Headquartered in Mumbai, Multi Commodity Exchange of India Ltd (MCX) is a state-of-the-art electronic commodity futures exchange. The demutualized Exchange has permanent recognition from the Government of India to facilitate online trading, and clearing and settlement operations for commodity futures across the country. Having started operations in November 2003, today, MCX holds a market...
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