| 49. Who can be a member of the Exchange ? |
| The Bye-laws and Articles of
the Association prescribed the criteria for being a member of the
Exchange. Any person desirous of being a member of the Exchange may
approach the contact persons whose names, telephone numbers, fax
numbers, email addresses etc. are available on the website of FMC: |
|
50. Who are the participants in forward/futures markets? |
| Participants in forward/futures markets are hedgers, speculators, daytraders/ scalpers, market makers, and, arbitrageurs. |
| 51. Who is hedger? |
| Hedger is a user of the market, who enters into futures contract to manage the risk of adverse price fluctuation in respect of his existing or future asset. |
| 52. What is arbitrage? |
| Arbitrage refers to the simultaneous purchase and sale in two markets so that the selling price is higher than the buying price by more than the transaction cost, so that the arbitrageur makes risk-less profit. |
| 53. Who are day-traders? |
| Day traders are speculators who take positions in futures or options contracts and liquidate them prior to the close of the same trading day. |
| 54. Who is a floor-trader? |
| A floor trader is an Exchange member or employee, who executes trade by being personally present in the trading ring or pit floor trader has no place in electronic trading systems. |
| 55. Who is a speculator? |
| A trader, who trades or takes position without having exposure in the physical market, with the sole intention of earning profit is a speculator. |
| 56. Who is market maker? |
| A market maker is a trader, who simultaneously quotes both bid and offer price for a same commodity throughout the trading session. |
| 57. What kinds of risks do participants face in derivatives markets? |
| Different kinds of risks faced by participants in derivativesmarkets are: a) credit risk b) market risk c) liquidity risk d) legal risk e) operational risk |
| 58. What is credit risk? |
| Credit risk on account of default by counter party: This is very low or almost zeros because the Exchange takes on the responsibility for the performance of contracts |
| 59. What is market risk? |
| Market risk is the risk of loss on account of adverse movement of price. |
| 60. What is liquidity risk? |
| Liquidity risks is the risk that unwinding of transactions may be difficult, if the market is illiquid |
| 61. What is Legal risk? |
| Legal risk is that legal objections might be raised, regulatory framework might disallow some activities. |
| 62. What is operational risk? |
| Operational risk is the risk arising out of some operational difficulties, like, failure of electricity, due to which it becomes difficult to operate in the market. |