Finance seminar held at IIM-K

Mr Gurmeet Singh, Product Head, Commodities, Reliance Money, conducted a case study contest and workshop on offshore trading for the participants. He noted that the Indian commodities markets still have a long way to go as 90% of the volumes still come from speculation, and a few players control the market. He outlined the launch and growth plans of Anil Dhirubhai Ambani Group in the area, saying that Reliance Money plans to be the largest player, and at least as big as the next four companies in the commodity broking space. Since a lot of people have lost money in commodities in recent times, he stressed the need for a well-designed product to bring back investor confidence. To take participation to the next level, it is imperative to build awareness among retail investors, he noted. He further stressed that given the current level of maturity, the dealer franchisees themselves will need to be trained before the knowledge can percolate down to every participant. He emphasized that it was especially important for farmers to be educated about commodity trading, since they are the primary stakeholders.

Off$hoRe Bazaar, the offshore trading game conducted by Reliance Money and IIM Kozhikode was a part of this event. This game was a pilot run for the trading portal that Reliance Money is going to roll out in the market soon, which will allow Indian retail investors to trade in offshore commodities, forex and other instruments. The contest was a major draw, seeing the participation of 400 teams from 18 of India’s top B Schools, with entries also received from institutes in Singapore and Dubai. The first prize went to Ajay Mishra and Manoj Sinha of IIM Kozhikode, who made a profit of $58000 on the given notional trading amount of $25000.

‘Hedge Funds are generally run for rich people in Geneva by rich people in Greenwich’ was how Dr. Vijay Sarathi, Sr. Vice President, Thomas Weisel International started his address. The discussion provided valuable insights about characteristics of Hedge Funds while touching upon the finer points of emerging markets, treasury spreads, and the dynamics of the hedge fund industry. He demonstrated that hedge funds have a higher probability of generating extreme returns and explained the necessity of innovative strategies in generating desired returns. He concluded by saying that in the future, hedge funds would be forced to increase transparency with both the fee structure and returns likely to come down.

What is Basel II and what it augurs for India’s banking system were the questions that Mr. Krishnakumar Variar, Director- Risk Solutions & Consulting at CRISIL faced from the inquisitive gathering. Differentiating between Basel I and II, he explained how Basel II would enable banks to deal with operational & market risk better. He went on to discuss the practical models which help quantify risk and the role of technology in implementing these models. Since the Basel norms give enough leeway to the national banking regulator (RBI), to tailor the norms to a country’s requirements, he said implementation problems could be minimized if the Basel rollout in India is phased.

Mr. Varun Gupta, Executive Manager (Valuations), Deloitte Financial Advisory Services wound up the day’s talks by speaking on a subject which is close to the hearts of many Indians today – ‘Financing India’s Infrastructure Needs’. He stated that India’s airport, road, port and power sectors would need about $350 billion over the next decade. Pointing out that such a large sum cannot be financed by the government, he presented public-private partnership (PPP) as a feasible alternative and elaborated on the opportunities and risks involved in it. He ended the stimulating talk by giving deep insights into emerging finance structures in infrastructure investment and projects.

The event was a big success, with enthusiastic participation from industry and academia. As Suma Kamath, a part of the organizing committee said, “Arthanomics provided a lot of learning about the emerging economic scenario. Learning about hedge funds and commodity trading from some of the top people in the field was most informative and an exciting experience.”

For more information, please visit the seminar website, www.iimk-fy.com .