SPOT MARKET Anjani Sinha MD & 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 Tel: Fax: ,