What is a Commodity Exchange?
Commodity exchanges are trading organizations that engage in transactions that involve the buying and selling of futures and options related to the commodities market. Generally, the commodity exchange will maintain a physical location where trading activity takes place. Increasingly, a commodity exchange will also provide online access to trading activity, including the ability to trade on the exchange by electronic means. Perhaps one of the most well known commodity exchanges in the world today is Commodity Exchange, Inc. located in the Manhattan area of New York City. Known simply as COMEX, the particular commodity exchange has been around for decades and has a solid reputation throughout the investment community. This exchange is particularly well known for metal futures, although COMEX does engage in other commodity options trading. The basic structure of any commodity exchange will involve creating a platform of standards, rules, and processes that will govern the trading activit
A commodity exchange is an association, or a company or any other body corporate organizing futures trading in commodities. What is the meaning of futures contract? A futures contract is a type of forward contract. FCRA defines forward contract as a contract for the delivery of goods and which is not a ready delivery contract. Under the Act, a ready delivery contract is one, which provides for the delivery of goods and the payment of price therefore, either immediately or within such period not exceeding 11 days after the date of the contract, subject to such conditions as may be prescribed by the Central Government. A ready delivery contract is required by law to be fulfilled by giving and taking the physical delivery of goods. In market parlance, the ready delivery contracts are commonly known as spot or cash contracts. All contracts in commodities providing for delivery of goods and/or payment of price after 11 days from the date of the contract are forward contracts. Forward contra
