SPOT MARKET

Anjani SinhaMD & CEO

Spot Market : Vision 2025

Last decade witnessed emergence of

China as the leading player in global

trade and exports

But, the next decade will belong to India

making it a global super power

Be it Agriculture, Trade, Industry, IT or

Infrastructure

Electronic Exchanges will play a great

role in achieving this target, be it equity,

derivatives, currency, commodity: spot

and futures

Role of Electronic Exchanges: Macro economic perspective

Electronic Exchanges connect people with markets and

enable them to trade seamlessly fearlessly

They serve a great macro economic objective by

delivering:• Price Transparency, • Counter party guarantee, • Reducing cost of intermediation• Creating marketing efficiency• Enhancement in producers’ price realization• Reduction in consumer paid price• Audit trail leading to better tax compliance

Electronic Spot Commodity Exchanges have carved out

a niche market connecting farmers with processors and

exporters, enhancing their price realization.

Shape of Spot Commodity Market: The Next Decade

Implementation of GST, leading to emergence of pan India Commodity Market,

removal of geographical, state and trade barriers

A network of warehouses, silos and logistic parks, transforming

commodities into tradable negotiable warehouse receipts

Electronic Commodity Spot Exchanges facilitating trades in such negotiable

warehouse receipts, leading to discovery of benchmark spot prices

Seamless information flow among various networks- GST, direct taxes,

banking transactions, land holding, leading to transparent reporting of business

transactions

Plastic, Kissan Credit Card, etc would replace cash(which dominates spot

market today)

Producers and users would prefer to trade electronically through Spot

Exchanges to avoid counter party risks, because otherwise also they would not be

able to avoid taxes and duties.

In this backdrop, Spot Exchanges having pan India presence will play a great

role in shaping up the Indian commodity spot market.

Spot Market Reforms: The Orbit Shift

Connecting overseas buyers and

sellers with Spot Exchange platform

Spot Exchange to be conduit between

Indian producers and foreign buyers,

providing counter party guarantee to

both sides.

Most of the domestic trade as well as

import/ export transactions would be

routed through Electronic Spot

Exchanges.

International experience : Way Forward

Ethiopia:

•Government of Ethiopia made it compulsory to trade in export oriented commodities such as Coffee, Sesame, etc. through electronic spot exchange.

Belarus:

•Government has promoted Belarusian Universal Commodity Exchange, which is an Electronic Spot Exchange in commodities. •Today, major chunk of domestic and international trades in Belarus is executed through this Exchange. As a result, it has become the largest spot exchange in Eastern Europe.

Way forward in India:

•On the same lines, Government of India should mandate bulk trades in

sensitive commodities through Electronic Sport Exchanges.

•This would create price transparency, real time price dissemination at arrival

center and consumption center, check price manipulation and hoarding of

stocks and carry out much needed reforms in Commodity Spot Market.

Thank You

National Spot Exchange Limited , 102 A, Landmark, Suren Road, Chakala, Andheri (East), Mumbai - 400093. Tel: +91-22-67619900 Fax: +91-22-67619931 , E-mail: info@nationalspotexchange.com