Persistent inflationary pressures in global commodity prices in the recent past sparked a debate over its nature with speculation in commodity markets being singled out as the primary factor behind rising prices, even leading to a demand for a ban on futures trading for several important commodities. In recent times, increased amounts of capital have been flowing into the commodity futures trade, and there is thus a need to analyse the role futures market participants can possibly play in forming or distorting prices in the market for the underlying commodity. Investigations carried out by the US Commodity Futures Trading Commission and the Indian Expert Committee on Futures Trading could establish no conclusive proof regarding the role of the futures market in aggravating inflationary pressures. However, the task forces have again brought forward some important issues, which can help form a guideline for improving infrastructure, surveillance and efficiency in the commodity futures markets in India.
