Beruflich Dokumente
Kultur Dokumente
Commodity market
Waiting on the sidelines
to subscribe online: www.readtheboss.com 15 Mar - 14 Apr 2011 the boss 41
COVER STORY
G
old was in use as a form buyers and sellers of a commodity instead human resources. He says, “There is a lack
of money, in one form of making the people bear the burden of of basic infrastructure and human resource;
or another, at least from finding a buyer or seller; thus, was born the businesses are being run without
2560 BC. It has been the commodity exchange (CE). adequate market survey, growth analysis,
used as a store of value CE entered the Nepali market only and policies to fit the business atmosphere.
both by individuals in 2006, but has not been able to grab a As far as the seminars/sessions that CEs
and countries since major chunk of investors. However, in the offer are concerned, those are inadequate
then. The central banks still use gold as past three years, the number of brokers to effectively educate the investors and
an international trading and swapping has grown five-fold, investors 60-fold, and brokers, which is evident from the market
currency. It is still considered by many as a CEs five-fold; yet the size of investment has with a lot of investors incurring losses.
store of value and a safe bet in times of crisis. not witnessed a similar growth rate—the There really is a horrendous lack of experts
Gold and other precious metals are assets growth is merely divided into many shares in the market. The CEs or the government
that are both tangible and liquid. However, of the same pie entering the market. Yes, ought to focus on this issue—they could
over time, people began to consider any even hire people from abroad.” Shrestha
commodity, chiefly agro products, as a form warns that if the required human resource
of finance, and the first modern organised is not culled within two years, the business
futures exchange began in 1710 at the would hit a stumbling block.
Dojima Rice Exchange in Osaka, Japan; a Meanwhile, ACBN has been holding
century later, the US followed suit with a talks with the Global Exposition and
similar set-up in Chicago, which is located Management Services regarding a book
at the base of the Great Lakes, close to fair on commodity market (CM); the fair
is aimed at exposing the market to the
public at large and to educate them about
As far as the seminars/ it. Shrestha says, “This is how we are
sessions that CEs offer aiming to be a medium for promoting CM
are concerned, those are in the coming five to six months. All the
inadequate to effectively initiative towards these goals are being
taken by the private sector alone; the
educate the investors
government representatives are there only
and brokers. to collect taxes and participate in various
Bijesh Shrestha inaugural programmes as chief guests.
president, ACBN The government is ignoring issues like
awareness development, infrastructure
development, policy formulation,
human resource development, capital
the farmlands and cattle belt of the US there was a big boom in the initial period
Midwest, making it a natural centre for as many investors rushed in enamoured management, etc. “If experts are available,
transportation, distribution and trading by the glamour of testing the new market, the CM can take a giant leap. However,
of agricultural produce. The glut and but most of them did not elect to return expertise generation is a costly affair
shortage of these products were causing to it as they found no substantial returns beyond the capacity of broking agencies;
chaotic fluctuations in price, and this is on their investments. Vijay Satyal, CEO, that said, the issue can be addressed
what led to the development of a market Commodities and Metal Exchange Nepal through mutual efforts, and the ACBN
enabling the grain merchants, processors, (COMEN), the pioneer CE of Nepal, says, has been working on it along with our
and agriculture companies to trade in ‘to “Those who came to invest/trade were less backers.”
arrive’ or ‘cash forward’ contracts so as to informed; they were less aware about the
insulate them from the risk of adverse price CE they were associated with and are still Regulation or the
change while at the same time enabling uneducated about the trade mechanism.”
them to hedge. He adds, “The brokers ought to have a
lack of it
As there’s a blatant lack of a central
Forward contracts were standard at good R&D and should be particular in
the time. However, most forward contracts informing their clients. The CEs have rules regulatory authority for CM, the investors
weren’t honoured by both the buyer and that stipulate the training of brokers about have been diffident about joining in.
the seller. For instance, if the buyer of a R&D; here at COMEN, we have conducted CEO Satyal says, “We are a self-regulated
corn forward contract made an agreement a lot of symposiums and seminars for our organisation. Even though we are an
to buy corn, and at the time of delivery the brokers to inform them about international exchange, we regulate our members—
price of corn differed dramatically from the markets, international monetary policies, trading members, clearing members,
original contract price, either the buyer or and about the influences of the prices cleansing members, and market makers.
the seller would back out. Additionally, the of different commodities.” However, Ultimately, we will start facilitating the
forward contracts market was very illiquid Bijesh Shrestha, president, Association of market when the government starts
and an exchange was needed that would Commodity Brokers Nepal (ACBN), is not regulating CM. The compliances that the
bring together a market to find potential at all happy with the infrastructure and government has laid out in the committee