1. Unlocking Gold's Potential- IMC Event- 22nd Dec.2016
By Shripal Shah

2. Exchange Platform & Gold hedging
India one of the biggest market for gold; hedging interest is shifting to exchange traded derivative products
Risks faced by participants are credit risk, market risk, liquidity risk, legal risk, operational risk
Hedging means taking a position in the futures market that is opposite to a exposure in the physical market with objective of reducing or limiting risks associated with price changes
Importers, Bullion traders, Jewelers, exporters - Current hedging participants
New Participants - Banks to hedge their gold exposure under Gold Monetization Scheme on the exchange platform
Current hedging options - Gold Loan /Forwards /Futures
Second largest consumer after China and having annual import of 800+ tonne. Annual Gold holding in In India is around 20,000 tonne approximating to 60 Lakh crore. (approx. USD100 bn / 1 tn) Four times the demonetized currency value.
Demonetised currency value approx. USD 234 bn. 15 Lakh crore
RBI Gold reserve 587 tonne/ Sovereign bond 15 ton / GDS 6 ton
Participants in forward/futures markets are hedgers, speculators, day-traders/ scalpers, and, arbitrageurs.

3. Increased Hedging with futures - Factors
Gold Future Rate - a Bench mark Rate - increases Hedge effectiveness
Hedging awareness Seminars by Regulators-Exchanges-Members
Regulatory Enablers
Income Tax Amendment - Futures Trading treated as business income and not Speculative income
Guidance note on Derivative accounting – No net impact in the statement of profit and loss under hedge accounting
Disclosure requirement for listed company to disclose commodity price risk on and hedging activities in the annual report
Adequate position limits
Price discovery & Price risk management
800+ tonne of import - Gold OI is 8-10 tonne only – only 1%

4. Gold hedging with futures - Challenges
Hedging for profit mentality
Perception - Commodity hedging vs currency hedging
High cost of hedging - CTT
Except futures no other product available
No Liquidity in long dated contracts
Daily MTM – onerous operational process
Hedging Data disclosure still at an initial stage

5. Presentation by Kotak Commodity
Thank You
Presentation by Kotak Commodity

6. Kotak Commodity Services Pvt Ltd - Introduction
Promoted by the Kotak family having over 80 years of core experience in commodity trading
Nationwide network of more than 40 branches and 300 franchisees
More than 300 employees
Dealing rooms are open from
8.30 am to midnight
Full-fledged research division involved in macro & commodity research