Electronic Trading and the Globalization of Grain Markets Prepared by: Charles Whitman Founder and CEO, Infinium Capital Management February 24, 2011 USDA’s 2011 Agricultural Outlook Forum Today’s Strategies & Tomorrow’s Opportunities

Intro “The revolutionary idea that defines the boundary between modern times and the past is the mastery of risk: the notion that the future is more than a whim of the gods and that men and women are not passive before nature…. By showing the world how to understand risk, measure it, and weight its consequences, they converted risk-taking into one of the prime catalysts that drives modern Western society”

Risk Management  Risk Management Understanding = Major Business Edge  Hedge Away Risks  Focus On Core Competency

Benefits of Electronic Trading  Transparency  Access- 24 Hour Markets  Increased Volume & Liquidity  Tighter Bid/Ask Spreads  Faster Product Adoption  Instant Reporting & Risk Management

Accessibility Due to Electronification

Global Ag Exchanges  Africa  South African Futures Exchange  Asia  Agricultural Fut Ex of Thailand  Bursa Malaysia  Central Japan Commodity Ex.  Kansai Commodity Exchange  Korea Exchange  Singapore Exchange (was SIMEX)  Tokyo Grain Exchange  Australia  Australian Stock Exchange  Canada  ICE Futures Canada  China  Dalian Commodity Exchange  Zhengzhou Commodity Exchange  North America  Chicago Board of Trade  Chicago Mercantile Exchange  ICE Futures US Softs  Kansas City Board of Trade  Minneapolis Grain Exchange  New York Mercantile Exchange  India  Multi Commodity Ex. of India  National Cmdty & Derivs Exch.  Latin America  Bolsa de Mercadorias e Futuros  Mercado a Termino Buenos Aires  Rosario Futures Exchange  Europe  NYSE LIFFE - London  NYSE LIFFE - Paris  Russian Trading System  Turkish Derivatives Exchange  MFAO Olive Oil Exchange

Accessibility Due to Electronification

Challenges  Technology (Safe, Stable & Fair)  Error Prevention  Scalability & Bandwidth  Equal Direct Access  Fair Access to All Market Participants  Dark Pools  Willingness to Change  Hesitant to push the button  Some parties have a vested interest in holding on to the “old” way of trading

 Risk Hedging  Grain prices  Energy prices  Interest rates  Margin Hedging Benefiting From Electronic Ag Markets

 Strategy Examples  Futures  Futures Spread  Cash/Future Swap – EFP (Exchange for Physical)  Options RFQ (Request For Quote) Outright Options CSO (Calendar Spread Options)  Inter-Commodity Spreads (and Spread Options)

Thank You 600 W. Chicago Ave Suite 300N Chicago, IL Business Development