Transcript Slide 1

www.nationalspotexchange.com
Memorandum of Understanding signed with
Government of Madhya Pradesh on May 26, 2007
Mr. M. A. Khan, IAS, Commissioner Mandies & MD , Madhya Pradesh State Agricultural Marketing Board
exchanging MoU with Mr. Anjani Sinha, MD & CEO, NSEL in the august presence of Hon’ble Chief Minister of
Madhya Pradesh Shri Shivraj Singh Chouhan
www.nationalspotexchange.com
Government of Gujarat granting
License to NSEL 10th October 2007
Shri Shankerlal Guru, Chairman, NSEL receiving E Market License from Hon’ble
Minister of Agriculture, Government of Gujarat Shri Bhupendrasinhji Chudasama
www.nationalspotexchange.com
Memorandum of Understanding signedwith
Government of Rajasthan on November 30, 2007
Mr. Ashish Bahuguna, IAS, Principal Secretary, Govt. of Rajasthan signing MoU with Shri Anjani Sinha, MD & CEO,
NSEL in the august presence of Hon’ble Chief Minister of Hon’ble Chief Minister Smt. Vasundhara Raje
www.nationalspotexchange.com
National Spot Exchange
– Project Outline
• A National level Electronic Transparent institutionalized spot market.
• A market place where farmers, traders, corporates, processors and
importers can sell and buy at the best possible and competitive
rates.
• Provides counter party guarantee in respect of all trades.
• Provides services like quality certification, storage of goods and other
customized value added services.
• Will strengthen the futures market by creating a delivery platform,
which can be used by the buyers and sellers to procure / dispose off
farm produce, industrial goods, metals, etc.
• With the launch of NSEL, the canvass of commodity trading would be
complete – India will have both spot and futures market available on
electronic platform with national reach.
www.nationalspotexchange.com
Promoters of NSEL
• Financial Technologies, a leading
software company having presence
in the entire financial market
• NAFED, a national level co-operative
having presence in major farm
produce
www.nationalspotexchange.com
Board of Directors
•
Shri Shankal Lal Guru – Chairman
– Noted Agriculture activist
– Chairman of Guru Committee formed by Govt of India, which drafted Model
APMC Act
•
Shri Jignesh Shah – Vice Chairman
– Founder, CMD of Financial Technologies Group
– Has over 17 years of experience in the Securities and Commodities Exchange
Industry
•
Shri Anjani Sinha – Managing Director and Chief Executive Officer
– Director of MCX
– Having 18 years of experience of Stock and Commodity Exchanges
•
Shri B.D Pawar – Director
– Editor of CITA
– having 40 years experience in Agriculture Marketing
•
Shri Joseph Massey – Director
– Managing Director and Chief Executive Officer of MCX
– Having 18 years of experience with LIC, RBI, SHCIL and Stock Exchanges
•
Shri V. Hariharan – Director
– Director-Technology of FTIL and Director of MCX
– Having 25 years of experience in Business Enterprise Technology Solutions and
Strategy
www.nationalspotexchange.com
Contract Specifications
Trading related
Delivery related
information
information
• Opening of contracts
• Delivery unit
• Trading unit
• Delivery center(s)
• Tick size
• Quotation / Base value
• Price quote
• Daily price limits
Quality Specifications
• Grades
• Standards etc.
• Tolerance limit for
• Initial margin
quality / quantity -
• Maximum order size
discount/premium
www.nationalspotexchange.com
Trading Mechanism
• All contracts with single day duration
• All positions outstanding at end of day will result
into compulsory delivery
• Fully automated screen-based trading system
• National reach
• An order driven trading system
• Transparent, Objective and Fair system for
automatic order matching
• Identity of the trader undisclosed
• Flexibility for placing orders
www.nationalspotexchange.com
Clearing and settlement
• Delivery both in physical and demat.
• Delivery and pay in dates:
– Gold and silver: T + 1
– Agri commodities: T + 3 / T + 4….,
commodity-specific, depending upon
time lag in quality checking
www.nationalspotexchange.com
Contracts to be traded
•
Agri commodities / Farm Produce
– Commodities deliverable in Gujarat, Maharashtra, Karnataka,
Bihar and Kerala
– Separate contract for specific delivery center
– Contracts to map every important arrival mandi and
consumption center
– Contracts deliverable in other States to be launched as soon as
we get license in those States
•
Bullion
– Separate contracts for each center
•
Industrial commodities
•
Buyers and sellers in all these contracts can be from any location,
but delivery will be on ex warehouse basis as per specification
•
Depending upon need of the members, any number of contracts
can be launched.
– Non ferrous metals, industrial chemicals
www.nationalspotexchange.com
NSEL Network Platform
www.nationalspotexchange.com
Trading, Clearing and Settlement
Mechanism – a Flow Chart
NSEL
On – Line Terminal
Trading
(Bid / Ask)
On – Line Terminal
Matching
Member/Broker
Seller
Farmer
Contract Farmer
Importers
Cooperatives
Government
Clearing House
Clearing Bank
Settlement
Member/Broker
Buyers
Corporate
Wholesalers
Exporters
Traders
Government
Warehousing / Logistics
Physical Delivery
www.nationalspotexchange.com
Trading, Clearing and
Settlement Mechanism
• NSEL will enroll members across the country.
• Members will expand trading terminals through
branch, sub brokers and franchises.
• A trader can become a member directly or he can
trade through any member.
• A trader will sell his commodity in specific location
delivery contract, deliver material at NSEL specific
warehouse where quality will be checked against the
contract specification notified by NSEL, if it confirms
to quality standards, material will be accepted in the
warehouse and WR will be issued, such WR can be
tendered by the seller to NSEL towards his delivery
obligation.
www.nationalspotexchange.com
Trading, Clearing and
Settlement Mechanism contd..
• NSEL will collect payment from the buying member
through electronic debit, endorse the WR in favor of
the buyer and credit the sale proceeds in account of
the seller.
• In case of failure of seller or buyer, NSEL would auction
against the defaulting party and obligation would be
fulfilled in that manner.
• In case of default, NSEL guarantees all trades and
maintains settlement guarantee fund for this purpose.
• Corporate buyers would be comfortable to buy through
NSEL, because the quality will be guaranteed and
pricing would be transparent.
www.nationalspotexchange.com
Legal Status
• Members, sub-brokers and clients trading on
NSEL platform will not need any APMC license
to trade in agri-commodities.
• All compliance relating to market fee will be
taken care by the Exchange.
• VAT compliance will be required in case of
taxable items. Members can have state level
license for VAT. Exchange will also make
arrangements in this regard, who may charge
nominal fee for such services.
www.nationalspotexchange.com
Advantage of NSEL Platform
• Compared to 2% - 3% brokerage in physical market.
• Transaction fee in NSEL would be:
• Non delivery based transactions: Rs. 10 to Rs 5 per
lac based on turnover slabs.
• Delivery based transactions: Commodity specific
charges fixed on per lot basis, which will include
loading, unloading, assaying and all other incidental
expenses. This will vary from commodity to
commodity and will be notified in advance.
www.nationalspotexchange.com
Advantage of NSEL Platform
contd..
• Desktop Monitoring
• Efficient Warehousing and logistics support
• Complete end to end solution
• Guaranteed Trade with Weighment and Quality
assurance
• A New distribution channel with trade guarantee
• A complementary market to derivative traders
• Timely disbursement of commodities and funds
• Transparency in transaction and settlement
www.nationalspotexchange.com
Advantages to the Traders
• Traders would get a bigger and liquid market, where they
can sell huge quantity.
• Elimination of counter party risk, credit risk, rejection at
buyer’s go-down at the time of delivery. Once they sell on
NSEL and deliver in NSEL warehouse, they are free from all
post trade risks.
• Since large number of investors from all across the country
would be available at NSEL platform, they can realise better
price for their product.
• Access to bank finance against warehouse receipts.
• They can expand their activities to multiple commodities,
because of operational ease, availability of finance and
absence of counter party risk under NSEL system.
www.nationalspotexchange.com
Advantages to the Farmers
• Direct access to a national level market
• Farmers can quote their own selling price
• Reduction in cost of intermediation
• Increase in bargaining power
• Increase in holding capacity
• Loan against pledge of warehouse receipts
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 completely avoided.
• Exporters can save brokerage or commission payable
to procurement agents.
• Looking at the price available at NSEL, they can
make export commitment and cover themselves
immediately by buying at NSEL.
www.nationalspotexchange.com
Advantages to the End Users
• The End Users can buy directly at competitive
price
• Operational comfort. Instead of contacting
various suppliers or brokers, they can see the
best prices on the system or they can submit
their own buy prices too.
• NSEL could function as a single window system
for procurement of various materials.
www.nationalspotexchange.com
Advantages to Arbitrageurs
• Advantage of cash-future arbitrage electronically.
• Delivery fungible between spot and futures for
common commodities and common delivery centers.
• Disposal of deliveries received on futures market.
• Jobbing and spread trading between cash and futures.
www.nationalspotexchange.com
Benefits to Futures Exchanges
• Transparent spot price available for Due Date
Rate calculation.
• Ease of moving towards compulsory delivery
contracts through structured spot market.
• Healthy growth of futures market ensured
through development of the structured spot
market.
www.nationalspotexchange.com
Membership of NSEL
• Membership drive across the country
• Initially only Trading-cum-Clearing Members
• Admission based on capital adequacy norms viz. security
deposit and financial networth
• Membership of the Exchange available to Individuals,
Corporates, HUFs, Partnership Firms, Cooperatives etc.
• Admission process – application, compliance, interview
and enrolment
• Training
• Mock Trading
www.nationalspotexchange.com
Membership criteria
• Admission Fee: Rs 5 lakh
– Non refundable, but membership transferable
after 3 years
• Security deposit: Rs 5 lakh
– Refundable
• Annual Subscription: Rs. 25,000
• Membership processing Fee: Rs. 5,000
• Networth criteria: Rs. 20 lakh
www.nationalspotexchange.com
Exchange Set-up
• Hardware – Procured and installed
• Software – Developed and pilot testing done.
Ready for Mock Trading by the Members
• Clearing banks – IndusInd Bank, State Bank of
India, UTI Bank Ltd. and Union Bank of India
• Core team – Recruited and trained
• Quality Certification Agencies – Supported by
NBHC
• Warehouses – Supported by NBHC
• Networking – Through VSAT, Leased Line and
Internet
www.nationalspotexchange.com
Business potential for MCX members
• Clientele business:
– To get a new set of clients from physical
market
– To provide structured products regarding cash
future arbitrage, etc.
• Jobbers and arbitrageurs
– Fungible deliveries between MCX and NSEL
– Cash future arbitrage
www.nationalspotexchange.com
Connectivity for MCX members
• Existing VSAT users
– By installing separate IDU, they can connect
to NSEL
• Leased line connectivity
– Separate leased line will be required
• Internet connectivity
www.nationalspotexchange.com
Thank You.
National Spot Exchange Limited
4th Floor, Boston House,
Suren Road, Chakala, Andheri (East)
Mumbai - 400093.
Tel: +91-22-67099300 Fax: +91-22-67099031
E-mail: [email protected]
www.nationalspotexchange.com