Future – spot relationship: An empirical study of pepper market

In this paper, the price discovery relationship for pepper has been examined. Price discovery results are cheering given the embryonic character of commodity market in India and it seems market is less competitive. However the market does not seem to be competitive. The findings of this paper have great implications for policy makers, hedgers and investors and will help in deeply understanding the role of futures market in information dissemination. These markets are becoming more informational mature and market regulators have taken adequate steps for market development. Forwards Market Commission (FMC) should be given ample powers to standardize commodity market and penalise any insider trading and price manipulations. Trading efficiency and transparency must be ensured by well organising the spot market adding electronic feature to it. Warehousing; testing labs as well as other eco-system linkages must be established to strengthen the derivative market trading