Determinants of a successful commodity contract: Evidence from the Indian agriculture futures market

In this study, I examine the determinants of a successful futures contract and explore whether an exhaustive checklist of criteria such as the one proposed by the Securities and Exchange Board of India (SEBI) guarantees the success of a commodity contract. Using panel random-effects method on 30 agriculture futures contracts trading in India from 2003-2016, I find that volatility in spot prices is the most crucial determinant, followed by hedging effectiveness and open interest of a futures contract, whereas the size of the underlying spot market, compulsory settlement, and government-imposed ban on futures trading negatively impacts the success of futures contracts. This study has important implications for contract design and new product launches. (c) 2021 Published by Elsevier Ltd on behalf of Indian Institute of Management Bangalore. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-ncnd/4.0/)