Transcript No Slide Title

Emerging Commodity Exchanges in
a Globalized Economy
UNCTAD, Commodities Branch
Leonela Santana-Boado
Role of the Commodity Exchange: When is it
useful to start the creation of a commodity
exchange?
exchange provide?
Transparency in prices
Everybody can
know at what price
is each product
sold
Reduces cost transaction
Everybody is in the
same place, no need
to look for buyer or
seller
Provides price discovery
Sorry, I only deal
with love affairs,
look at the
commodity
exchange
Avoid
manipulation,
provide a
benchmark price
for transaction
What will be the
price of Robusta
coffee next
month?
Role of the Commodity Exchange:Why Have a
Commodity Exchange?
Through the
exchange
Reduce counterparty risk, increase security.
It’s the most competitive trading mechanism available
It gives a competitive price quote
Increases sources of finance
Allows price risk management
The development of a commodity exchange;
preconditions
I will reach it
A real willingness from politicians
Sound infrastructures
A sound legal
framework
A real interest from exporters,
traders and producers
The development of a commodity exchange;
settings
And now our daily
report on wood
prices quoted at the
exchange
Telecommunications
between traders and the
trade floor
Clearing house floor
controls
Availability of information
through medias
Trade floor
Brokers ’ floor
Building settings
Allow the existence of the exchange and its practices,
provide incentives to deal in the exchange
Law modification
What would be the components of a detailed action plan
1
2
3
Necessary infrastructure:
 trading room
 many telephones
 weighting and quality
control equipment
 a system to record prices
Trading rules:
choose
the
right
language for the orders
 best bid/offer should be
automatically accepted
register
the
deal
immediately on standard
form
Exchange organization /
rules to determine:
 formal criteria for
access
 financial guarantee
 which staff
 the trading period
4
Contract formulation including:
 the minimum quality acceptable
 discount or premium if quality is
lower or higher
 traded quantity
 delivery conditions
 procedures to follow in case of
dispute
5
Need to be trained:
 those active on the exchange
 exchange officials
 exchange users outside the
exchange
 create some awareness among
local bureaucrats and politicians
Roles of Government and International
Organisations
Motivate producers to deal through the exchange
Arrange that quotas for low-tariff entry of
selected products into other countries are traded
through the exchange
Tax speculation and hedging differently
Do not change price policy too often
In building infrastructure
In providing training and
spreading information
In the design of contracts
For reliable trading system, prices, contracts,
brokers and traders
For reliable quality specifications
and warehouse receipts
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