Commodity Spot Trading

...

- Commodities are deposited in warehouses operated by ECX in major surplus regions of the country.

- At the ECX warehouse, commodities are sampled, weighed and graded using state-of-the-art technology grading and weighing equipment.

- ECX warehouses issue an Electronic Goods Received Note and provide the depositor or his/her representative with a signed print copy. The Electronic Goods Received Notes are not negotiable, transferable or represent legal title to the deposited commodity.

- The depositor has to get Electronic Warehouse Receipt issued by the ECX Central Depository in order to establish legal title to the deposited commodity.

- The Deposited commodities are stored using global standards of inventory management which rely on First-In-First-Out principles, rotation, and careful environmental control.

- ECX Inventory Management system guarantees the quality and quantity of the commodity throughout the pre-determined period of storage.

- Further, ECX warehouses are insured at maximum coverage to protect against loss and damage of deposits.

Transaction orders for sales and purchases in standard lot sizes of standardized commodity grades (referred to as contracts) are recorded on Order Tickets. The ECX automated back office system ensures the existence and validity of the Warehouse Receipt backing the sale, the availability of buyer funds in a deposit account, and where applicable the validity of the Member-Client agreement. This automated reconciliation takes just minutes and is key to giving all market players confidence in the market.

ECX’s zero default, fast and efficient Clearing and Settlement department assumes Central Counter Party (CCP) risk for all members’ trades. It establishes the net obligations of each member, informs the members of their daily net obligations and transfers cash funds and commodity ownership among members.

Risk Management:

- ECX ensures that clearing members have daily allowable trade limits, and they can only trade within this limits. ECX has software in place to ensure that all clearing member’s transactions are assessed against their relevant limit, and reporting processes for limit breaches. ECX operates at a daily price limit to limit loses to investors from significant market movements.

- Credit risk arises when a clearing member fails to meet their payment obligation until a date in the future. ECX has policies requiring members to be approved before they trade; ensuring that they have pre-paid into their trading accounts. Credit risk due to shortfall in members account is mitigated by netting agreements and cash deposits in the form of settlement guarantee fund.

- ECX has strategy to measure and monitor the liquidity of settlement guarantee fund and to ensure that there are sufficient funds to meet clearing member’s transaction exposures. This is done by preparing scenario analysis over an appropriate timeframe of likely inflows and outflows of funds.

- openness, transparency and fairness

- Market surveillance team investigates all unusual trading pattern and pass on evidence in a report to the ECX Compliance department for further action if there was sufficient evidence that the exchange’s rules have been bridged.

- ECX also undertakes warehouse surveillance to minimize risk to the exchange and its members in sampling grading and storage of commodities

ECX’s establishment is founded on Proclamation No. 550/2007. This proclamation mandates ECX to develop its own rules for the governance of its various operations. Further, the Ethiopia Commodity Exchange Authority (ECEA) a regulatory body of the ECX was established by Proclamation 551/2007.

The Rules of the Exchange developed by ECX provide the blueprint for all rules governing membership, management, trading, warehousing, clearing and settlement, and other operations of ECX, in addition to the conduct of its members. ECX maintains a careful approach to monitoring and tracking the adequacy and performance of its members, as well as their behavior vis-à-vis their clients in the market. In line with global best practices, ECX experts regularly conduct surveillance on market trends as well as conducting audit and investigations on market operations to protect the market from manipulation, excessive speculation, fraud, or other malpractice.

the ECEA has the power to investigate wrongdoing and adjudicate cases falling under its jurisdiction or to refer criminal cases to the appropriate court.

SHANGHAI GOLD EXCHANGE

GE was established in October 2002 by People’s Bank of China (“PBOC”) upon approval by State Council and supervised by PBOC.

Founded in September 2014, Shanghai International Gold Exchange (“SGEI”) is registered in Shanghai Pilot Free Trade Zone and fully owned by SGE. SGEI enables foreign institutions and individuals to access to China precious metals market based on FT account system. SGEI is responsible for international market development, international members’ management and offshore investor services.

SGE provides trading, clearing, delivery and vaulting services of gold, silver and platinum. Trading products include physical trading, deferred trading, forward, swap, option and leasing.

These Spot Trading Rules of the Shanghai Gold Exchange (these “Spot Trading Rules”) are formulated pursuant to the Rules on Supervision of the Business Activities of the Shanghai Gold Exchange promulgated by the People’s Bank of China (the “PBC”) and the Articles of Association of the Shanghai Gold Exchange, to regulate trading activities in the market

Izmir Mercantile Exchange

The IME was founded in 1891 and today is the biggest and the most developed spot agricultural exchange in Turkey. The value of commodities traded on the IME has been more than US$2 billion a year since 2005

Izmir Commodity Exchange has played a significant role in developing the agricultural production, trade and exchange activities since its establishment. Izmir Commodity Exchange stands out among the leading Commodity Exchanges of Turkey with the experience it has and the projects it runs where the "true exchange rules" are applied and major agricultural products are traded. The transactions carried out in the raisins and cotton halls of Izmir Commodity Exchange are the oldest and best-functioning samples of spot market. Hence it becomes essential to look