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PULSES MEET - 2008
Compulsory Delivery based Electronic Spot Trading
in Pulses
By - Girish Raipuria Senior Vice President 8th
November 2008
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National Spot Exchange A Project

• 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.
• 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.

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Features of NSEL

• Demutualised Exchange
• Transparency in operations and decision making
• Dissemination of real time price and trade
  information
• Delivery based Market
• Settlement Guarantee
• Counter Party Risk
• Capital Adequacy Norms for the Members
• Efficient clearing and settlement system
• Experience in handling commodity markets

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Automated Trading

• NSEL introduces -
• - for the first time in India
• - automated screen based trading in commodities
• - resulting into compulsory delivery
• NSEL uses a modern, fully computerised trading
  system designed to offer the market participants
• - across the breadth and length of the country
• - a safe and easy way to trade in commodities
• NSEL trading system is called as National
  Electronic Spot Trading (NEST) System

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NEST System

• An order driven trading system
• National reach
• Identity of the trader undisclosed
• Flexibility for placing orders
• Transparent, Objective and Fair system for
  automatic order matching
• Complete Online Market Information
• Price Ticker - flexible speed customised
  portfolio
• Square-off facility

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Order Book

• Orders are first numbered and time-stamped on
  receipt and then immediately processed for
  potential match.
• Orders are matched based on -
• - Price Time Priority
• - Best Buy and Best Sell
• If a match is not found, then orders remain in
  the system

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Market Timings

• Trading in the commodities takes place on all the
  days except Sunday and Exchange specified
  Holidays.
• Timings for the agri-commodities are
• Normal -
• Monday to Friday 10.00 am to 6.00 pm
• (till 11.30 pm for other commodities)
• Saturday 10.00 am to 2.00 pm

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Contracts

• All contracts with a single day duration
• All positions outstanding at the end of the day
  results into compulsory delivery
• Buyers and sellers in all these contracts can be
  from any location, but delivery will be on
  ex-warehouse basis as per specifications
• Depending upon need of the members, any number of
  contracts can be launched.
• Settlement of the Pulses Contracts on T 7 basis

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Contract Specifications

• Trading related
• information
• Opening of contracts
• Trading unit
• Tick size
• Quotation / Base value
• Price quote
• Daily price limits
• Initial margin
• Maximum order size

• Delivery related
• information
• Delivery unit
• Delivery center(s)

• Quality Specifications
• Grades
• Standards etc.
• Tolerance limit for quality / quantity -
  discount/premium

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Tur Quality Specifications
Origin Myanmar origin lemon
Foreign matter ( Includes dust,sand and other admixtures) - Basis 1 Acceptable up to 2 with 11 discount
Damaged otherwise (including immature, shriveled, heated fungi and discolored grains), broken and weeviled seeds - Basis 8 Acceptable up to 12 with 10.5 discount
Moisture - Basis 12 - Acceptable up to 13 with 11 discount
The material will be tested on 3.75 mm sieve. The material should be free from live infestation. The material will be tested on 3.75 mm sieve. The material should be free from live infestation.
Packed in 50 kg gross weight in PP or Jute or industry acceptable bags. Packed in 50 kg gross weight in PP or Jute or industry acceptable bags.
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Urad Quality Specifications
Foreign matter Basis 1 Acceptable up to 2 with 11 discount
Weevil Seeds 1 (maximum)
Damaged otherwise Basis 1 Acceptable up to 2 with 11 discount
Brown Seed 3 (maximum)
Sister Beans Basis 1 Acceptable up to 5 with 10.5 discount
Small Seeds passing through slotted sieve 2.70 mm Basis 6 Acceptable up to 8 with 10.5 discount
Big seeds/higher grade retained on the 3.2 mm sieve Basis 18 (minimum) Acceptable up to 15 with 10.5 discount
Moisture Basis 10 Acceptable up to 12 with 11 discount
Packaging PP , jute or Industry acceptable bags of 50 kg of gross weight
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Advantage of NSEL Platform

• Desktop Monitoring operational ease
• Efficient Warehousing and logistics support
• Transparency in transaction and settlement
• Timely disbursement of commodities and funds
• Guaranteed Trade with Weighment and Quality
  assurance
• Complete end-to-end solution

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Advantage of NSEL Platform contd..

• Transaction fee
• Non delivery based transactions Rs. 10 to Rs. 5
  per lakh based on turnover slabs.
• Delivery based transactions
• - Storage charges Paise 25 per bag per day
• - Quality cert charges Rs. 750 service
  tax per 50 MT
• - Loading/Unloading charges Rs. 2.25
  per bag
• Lesser cost of intermediation

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Advantages to the Importers

• Elimination of counter party risk, credit risk,
  rejection at buyers go-down at the time of
  delivery. Once they sell on NSEL platform 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.
• Importers can save brokerage or commission.
• Looking at the price available at NSEL, they can
  can import and cover themselves immediately by
  selling at NSEL.

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Bank Finance

• Exchange has designated banks for loan against
  Warehouse Receipt
• At a negotiated interest rate
• Loan against pledge of Warehouse Receipt
• Increases in holding power
• Subject to shelf life of the goods
• On sale, the loan along with interest would be
  adjusted against sale proceeds and rest amount be
  paid to the seller.

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Connectivity for Market Access

• Secured access to Trader Workstation (TWS)
  through -
• Very Small Aperture Terminal
• Leased Line
• Internet
• Mapping with reference to networking
• Unique Member ID and User ID
• Password of Member Admin terminal and Trader
  Workstation to be changed within 14 days

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Network Platform
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Trader Workstation

• The trader workstation (TWS) is the terminal by
  which a member accesses the trading system
• Each trader has a unique identification for
  log-in
• A member can have several user IDs allotted to
  him for accessing TWS concurrently
• Daily Turnover limits for each User for normal
  market as well as for auction market
• A member can set-up his network across the
  country
• Let us have a look at the TWS for live trading

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Thank You.
National Spot Exchange Limited 102 A,
Landmark, Suren Road, Chakala, Andheri
(East) Mumbai - 400093. Tel [phone]
Fax [phone]  E-mail info_at_NSEL.com