Transcript Slide 1

Spot Contracts in Cotton Bales Trading,
Delivery and Settlement Process
Bhavik Mehta
VP- Cotton , National Spot Exchange
www.nationalspotexchange.com
Introduction
•
National Spot Exchange (NSEL) has launched compulsory delivery based
spot contract in cotton bales on Mumbai delivery basis.
•
Cotton bale contract is available on NSEL platform, which can be accessed
from any location for buying and selling.
•
NSEL provides excellent opportunity to the ginners to sell cotton bales on
the Exchange Platform to the buyers such as exporters, spinning mills and
traders.
•
NSEL has made arrangement for professional warehousing in Mumbai and
various other centers across Maharashtra for facilitating the trade. It is
further going to expand across the country.
www.nationalspotexchange.com
Physical Market operation from Buyer’s side
for ready delivery contracts
www.nationalspotexchange.com
Contract Specifications of Pre-certified Cotton Bales
Mumbai Delivery Contract
Commodity
Cotton Bales
Symbol
COTNYTL8
Contract
Daily contract
Buying and selling on intra day basis will be permitted, but all positions
outstanding at end of trading session on the same day must result
into compulsory delivery.
Trading period
Mondays through Saturdays except holidays specified in advance
Trading session
Monday to Friday:
Saturday:
10.00 a.m. to 6.00 p.m.
10.00 a.m. to 2.00 p.m.
Trading
Trading unit
100 Bales
Quotation/Base Value
Rs. Per Candy
Tick size (minimum
price movement)
Rs. 10
Daily price limits
3%
Price Quote
Ex – Warehouse, Yeotmal (out side Octroi Limits within 50 kms Radius)
excluding VAT/ CST and any other Additional Tax or Surcharge on
Sales Tax and Local Taxes.
Initial margin
5%
Maximum Order Size
1200 Bales
www.nationalspotexchange.com
Cont…
Delivery
Delivery unit
100 Bales and direct multiples thereof.
Delivery center(s)
Exchange designated warehouse at Mumbai.
Tender and Delivery
Period
Nine working days from the contract trading day.
Delivery Logic
Compulsory. Net positions at close of the trading session must be
delivered on the designated tender days.
Quality specifications on Physical Inspection and HVI Mode
Ginning Pattern
Roller Ginned Cotton Only – Saw Ginned Cotton will be rejected.
Staple Length
Min 28.5 mm
Micronaire
3.5 to 4.9
Strength
28 gpt
Trash%
3.0 % Maximum
Color- Grade
Not above 31-5
Moisture
Max 8.5 %
Physical Condition Of
Bales
All bales of the lot should be in good condition – should be free from oil /
ink stains penetrating the bale or damaged in any other way.
www.nationalspotexchange.com
Cont…
Packing Material
Should be in cloth packing only. Cloth material used should be of
good quality(50*11Oz). It should also be strapped either with
Plastic (PP) straps or with Iron hoops of good quality /
condition (not rusted) The bales should be well packed - from
all six sides - should be in export worthy conditions.
Not more then 5 bales should be pre- opened (either for sampling
or for any reasons). If any bale is pre- opened, then it must
have been well re- packed so that it is not in burst condition.
Bale size , Weight per bale
and total weight
Bales should be of approx. 48 “ x 18” X 18” dimensions .Total
weight of the lot (100 bls/lot) should be 17000kgs (+/- 5 %)
where in individual bales should not be weighing less then 160
kgs or not more then 175 kgs
Identification nos. / Markings
on Bale
All markings such as name of the Producer/ Ginner / seller, if any;
name of the Variety, if any; Lot no., if any; press Running Nos.
in continuation for all 100 bales. The P.R. Nos. in continuation
only will be considered as one lot. Every bale of the lot has to
have its serial no. starting from 1 to 100 and the Press running
nos. in sequence; Press marks, if any; Cotton Season all
identification marks - Marking should be put on cloth / Paper
labels, No plastic material should be used for labels, if
markings are stenciled with ink on surface of the bale, then
the ink used for such markings should not have damaged the
Cotton inside the bale.
Premium / discount
No premium / discount for any variation in quality specification.
www.nationalspotexchange.com
Delivery and Settlement Procedure of Cotton Bales Mumbai
delivery contract
Delivery logic
Compulsory delivery: Any buyer or seller having open position at
close of the trading session on the same day must result into
compulsory delivery. Delivery allocation will be done at client
level.
Delivery pay-in [Commodity] Regular
On T+8 by 2.00 PM
Auction
T+8 (5:00 pm to 5.30 pm)
Delivery pay-in [Commodity] against
Auction, if any
On T+9 at 11.00 am
Delivery pay-out [Commodity] Regular
On T+8 at 5.30 PM
Delivery pay-out [Commodity] Auction
T+9 By 01.00 PM
Pay-in of funds
MTM pay-in
Funds pay-in against delivery
Auction pay-in [Funds] if any
T+1(11.00AM)
T+8(01.00 PM)
T+9(12.00 noon)
Pay-out of funds
MTM Pay-out
Funds Pay-out (Regular)
Funds pay-out (Auction)
T+1(12.00 noon)
T+8 (5.30 PM)
T+9 (03:00 PM)
Delivery center
Delivery will be from Exchange designated warehouse at various
centers across Maharashtra & Mumbai.
www.nationalspotexchange.com
Procedure for deposit and sampling
• One day prior intimation, to the warehouse for necessary storage
arrangements. Based on the intimation received from the depositor,
delivery schedule will be intimated by the warehouse supervisor.
Loading and Unloading of Cotton Bales will be done on first cum first
serve basis.
• Members and their respective Clients willing to deposit Cotton for
“PRE- CERTIFICATION” in the Exchange accredited Warehouse will
require to contact Warehouse Manager in advance for availability of
space for necessary storage and Certification arrangements.
• Cotton Bales (Lot of 100 bales) to be deposited in the warehouse
shall be weighed individually / separately on the weighing scale. The
process will be monitored and certified by the Exchange nominated
independent International Controllers / Surveyors.
www.nationalspotexchange.com
Cont…
• It is to be ensured that the Cotton bales delivered at the
warehouse should comply strictly with the acceptable limits
as prescribed by the Exchange in the contract specification.
• On receipt of Cotton Bales at the warehouse and during
unloading the same, minimum 2 % of the lot (2 out of 100
Bales) will be selected at random for Moisture Testing and 2
% of the lot (2 out of 100 bales) as samples, for quality
analysis of physical properties. If required, samples may be
drawn from hard, soft and middle part of bales will be
opened for verification/analysis.
www.nationalspotexchange.com
Details of Exchange Designated Warehouses and Approved
Quality Assayer with Charges.
Name of the Warehouse
Warehouses of CWC & MSWC situated in Yeotmal
WH address
Detailed address will be intimated separately
Contact Person
E-mail
Storage charges*
Rs.2.00 per Bale per day
Quality Certificate Agency
SGS India Pvt. Ltd. Mumbai
Delivery Charges
The delivery charges @Rs. 40 per bale i.e.
Rs. 4000/- per lot of 100 bales for actual
deliveries.
The delivery charges are
inclusive of charges towards Loading /
sampling / Testing charges, Insurance and
free warehousing for five days while
withdrawals of Commodities.
www.nationalspotexchange.com
Auction Procedure on Buyer/Seller Default
The Exchange will initiate the buy-in and/or sell-out auction in case a member
fails to honour its obligation of pay-in of funds or commodities by the due date
within the scheduled time in full or in part.
Exchange will impose penalty of 1% on each defaulting parties and differential
rate of auction price and settlement price shall be distributed proportionately to
all the sellers or buyers depending upon the Buying in/Selling out auction for
the quantity.
Participation in the Buying in/Selling out Auction
The members who desires to participate in buy-in and/or sell-out auction must
have certified quality stocks in the Exchange approved Warehouse and/or the
funds in their settlement accounts.
www.nationalspotexchange.com
Cont…
Acceptance of Bids
Bids will be accepted within the range of 10% of the closing price of the trading
day. prior to the date of auction.
Auction on NET basis
In case there is a simultaneous default by seller and buyer, then the Exchange
will conduct the Buying in/Selling out Auction for the net quantity.
Auction Price
Auction price is computed at be the weighted average price of all the bids
accepted for the contract.
www.nationalspotexchange.com
Auction Settlement Schedule
Particulars
Day
Pay-in
Pay-out
Delivery of Commodities - auction
T+1
Up to 11.00 am
At 1.00 pm
Funds - auction
T+1
Up to 12.00
pm
At 3.00 pm
www.nationalspotexchange.com
Advantage of National Spot Exchange
Platform
•
For Exporters - Ensures 100 % hedging facility for ready shipments
export contracts. Ready shipments contracts – immediate month
shipment is substantial quantity of total export turnover of an average
exporter.
•
Assured Quality: As per Contract specification assured.
•
As per the current trade practice - 2 % sampling Quality checks done
after complete lot received at exchange nominated warehouse and
random Third Party Inspection ensures genuine quality.
•
Assured Timely Delivery: Can assure the buyer for Just in Time
Delivery - Minimum turn over time / trading cycle. Can enter into export
contract and complete the order by delivered at port of loading within
15 days.
www.nationalspotexchange.com
Cont…
•
Minimum Administrative work
•
Can develop more markets and customers as back hand is completely
taken care by the systems.
•
Can avail the readily available warehousing facility at minimal cost for short
term warehousing needs.
•
Can avail 70 % finance facility against warehousing receipts at most
competitive rates.
www.nationalspotexchange.com
Advantage to Ginners / Sellers
•
•
Elimination of credit risk in physical trade will be the real boon to the Ginners
Ginners will get a bigger market, where they can sell huge quantity.
•
Elimination of counter party defaults, which will be totally guaranteed on
National Spot Exchange platform. A settlement guarantee fund would be
maintained for this purpose.
•
Increases the price realization by the ginners with assured and timely
payment.
•
It will provide a platform through which Ginners will be able to negotiate price
of their commodity with the end users spread across the country at negligible
cost.
•
Once delivery is accepted by the Exchange, after the quality certification
process, Ginners need not be concerned about any quality related rejection by
the buyer or weight loss reported at buyer’s destination.
www.nationalspotexchange.com
Advantage to Suppliers
•
Ensures best / optimum prices for their produce
•
No payment risk as Payment is assured by Exchange and not by buyer.
Exchange’s Trade guarantees Fund of Rs.
•
No weight loss / shortages at Buyers end.
•
Third Party Quality inspection ensures unbiased quality evaluations.
•
No fraudulent claims against market fluctuations between the deal and the
time material reaches for approval of quality or once dispatched and before
getting payment.
•
No unknown deductions from the value of goods on any account.
•
Minimum overhead expenses for selling the produce.
www.nationalspotexchange.com
Cont…
•
Saves administrative expenses - sampling loss / courier expenses of
samples to diff brokers / buyers / no bank charges for receiving payments /
reduced manpower / reduced banking transactions as payments received in
full and final.
•
Can avail warehousing facility for short term needs at minimal costs and
also avail 70 % financing at least rate of interest against warehousing
receipts issued by Exchange.
•
Gives you freedom to work on your strength of sourcing seed cotton at
cheapest price and concentrating on improving the process of ginning to get
the best cotton produced from your factories. The marketing side is taken
care by Exchange ensuring you get the best price for your produce with 100
% payments guaranteed on time
www.nationalspotexchange.com
Advantages to the exporters
• Exporters can buy certified quality material through a secured platform.
• Hassles relating to procurement of material in physical market is totally
avoided.
• They can save brokerage or commission payable to procurement agents
• Looking at the price available at National Spot Exchange, they can make
export commitment and cover themselves immediately by buying at National
Spot Exchange
• Customized services regarding logistics can be provided by National Spot
Exchange.
www.nationalspotexchange.com
Advantages to the traders
• Traders would get a bigger market, where they can sell huge quantity.
• Elimination of counter party defaults, which will be totally guaranteed on
National Spot Exchange platform. A settlement guarantee fund would be
maintained for this purpose.
• Realize better price for their product due to wider market availability.
• Traders get the alternative platform for buying and selling various
commodities.
• They can expand their activities to multiple commodities, because of
operational ease, availability of finance and absence of counter party risk
under National Spot Exchange system.
www.nationalspotexchange.com
• Against hedging on futures market buying
on NSEL platform and storing at NSEL
accredited warehouse ensures any profits
/loss accrued will be considered as a
business profits / loss and not the
speculative profit / loss.
www.nationalspotexchange.com
Cotton Trading strategy at NSEL
Cotton Trading startegy at NSEL
www.nationalspotexchange.com
Thank You
National Spot Exchange Limited
102A, Landmark,
Suren Road, Chakala, Andheri (East)
Mumbai - 400093.
Tel: +91-22-67619900 Fax: +91-22-67619031
E-mail: [email protected]
www.nationalspotexchange.com