Price risk management is one of the most important subjects for economists. In this respect, hedging is one way of adjusting and declining risk. Generally, in all the world, price of agricultural products has maney fluctuations. This is so because of the nature of its demand and supply. Therefore The price fluctuation is one of the most important reasons for establishing futures markets. To establish commodity exchange, first of all, we need to know how it works, what are its characteristics, instruments and institutions,What are the operational, survaliances and legal framework of the commodity exchange. In this paper, we introduce commodity exchange and its characteristics .Then the instruments such as futures and forward contracts and options will be introduced. Legal, institutional &surveliance framework of the commodity exchange will be studied.Then, we introduce the enterance indices of commodities to the exchange .In the last section, we investigate the consequences of establishing commodity exchange in Iran.
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