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Requirements of a successful commodity futures exchange
Posted by Administrator on 12/29/2008
Training course examples ยป

A one day workshop example
(click here to open PDF)

Course outline

Futures exchanges play a vital role in the commodity industry. While no market meets the ideal, futures markets come closer to it than most others. Worldwide commodity trading is growing very fast. Today several countries want to become the commodity-trading hub in their region. You could do that by either strengthening an already existing exchange or by establishing a complete new one. An additional service that you could offer would be OTC Clearing.

It is therefore very important to choose for a best practice structure of the exchange and clearinghouse from the beginning, as you will not get a second chance to get it right. In this training Kasper Walet, an exchange veteran with over 20 years of experience, will guide you through the factors that will determine the successful implementation or extension of your exchange and (OTC) clearing activities.

Tailor made Training

This is just an example of a possible training. However, it will be my pleasure to discuss with you your requirements. This will allow us to make a tailor made training course that will exactly meet your demand.

The Program

I Structure Futures Exchange

Factors of success

  • Critical mass and liquidity
  • Standardisation
  • Reliable price index
  • Fair and orderly market
  • Price signals / time to react
  • Clearing and settlement
  • Potential timing of launch
  • International focus

Opportunities and obstacles

Organisation of a futures exchange

  • Ownership
  • Organisational structure

The clearing house

  • Business models
  • Guarantee funding
  • Clearing and settlement processes
  • Flexibility on accounting structures
  • Margining
  • OTC learing

Market integrity

  • Market surveillance
  • Customer compliance

Trading Technology

Contract Design

  • Instruments
  • Cash vs. Physical settlement
  • Auctioning vs. continuous trading
  • Standardization and customisation
  • Load shape
  • Delivery period
  • Cascading of products

Regulatory environment

  • Supervisory body and permits
  • National Regulation
  • EU Rules

II Exchange and Clearing Procedures

Setup rules and regulations futures exchanges

Admission and termination procedures

Trading/Market procedures

  • Daily trading procedures
  • Trading Safeguards
  • Market surveillance procedures
  • Position limits

Clearing procedures

  • Daily procedures
  • Compliance procedures

Risk Management procedures (valuation and margining)

  • Re-valuation of positions
  • Rules posting collaterals
  • Risk-based initial margin requirements
  • Initial margin cover
  • Intra-day margining
  • Money settlement and custodial arrangements
  • Clearing member capital-based position limits

Settlement procedures

  • Daily settlement
  • Delivery margin
  • Delivery settlement

Emergency/Contingency procedures

  • Trading
    • Possible market emergency procedures
  • Clearing
    • Non-fulfilment collaterals
    • Bankruptcy

Other procedures similar for trading and clearing

  • Instruments introduction and de-listing
  • Fees creation and updating
  • Amendments/changes to rules and regulations
  • Mismatch resolution
  • Dispute resolution
  • Communication
    • Authorities
    • Participants
    • Trading operations

Last changed: 01/08/2009 at 10:53 pm

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