Icex Final
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Transcript of Icex Final
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Definition of 'Commodities Market':
A physical or virtual marketplace for buying, selling and tradingraw or primary products. For investors' purposes there are
currently about 50 major commodity markets worldwide that
facilitate investment trade in nearly 100 primary commodities.
Commodities are split into two types: hard and soft
commodities. Hard commodities are typically natural resources
that must be mined or extracted (gold, rubber, oil, etc.),
whereas soft commodities are agricultural products or livestock
(corn, wheat, coffee, sugar, soybeans, pork, etc.)
There are numerous ways to invest in commodities. An investor
can purchase stock in corporations whose business relies on
commodities prices, or purchase mutual funds, index funds or
exchange-traded funds (ETFs) that have a focus oncommodities-related companies. The most direct way of
investing in commodities is by buying into a futures contract.
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INDIAN COMMODITY MARKET:
India commodity market consists of both the retail and the
wholesale market in the country. The commodity market in
India facilitates multi commodity exchange within and outside
the country based on requirements. Commodity trading is one
facility that investors can explore for investing their money. The
India Commodity market has undergone lots of changes due to
the changing global economic scenario; thus throwing up many
opportunities in the process. Demand for commodities both in
the domestic and global market is estimated to grow by four
times than the demand currently is by the next five years.
Commodity Trading
Commodity trading is an interesting option for those who wish
to diversify from the traditional options like shares, bonds and
portfolios. The Government has made almost all commodities
entitled for futures trading. Three multi commodity exchanges
have been set up in the country to facilitate this for the retail
investors. The four national exchanges in India are:
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y Multi Commodity Exchange (MCX)
y National Commodity and Derivatives Exchange (NCDEX)
y Indian Commodity Exchange (ICEX)
y National Multi-Commodity Exchange (NMCE)
Commodity trading in India is still at its early days and thus
requires an aggressive growth plan with innovative ideas.
Liberal policies in commodity trading will definitely boost the
commodity trading. The commodities and future market in the
country is regulated by Forward Markets commission (FMC)
Wholesale Market
The wholesale market in India, an important component of the
India commodity market, traditionally dealt with framers and
manufacturers of goods. However, in the present scenario,
their roles have changed to a large extent due to the enormous
growth that the economy has witnessed. The lengthy process of
wholesalers buying from manufacturers; then selling it to
retailers who in turn sold it to consumers does not seem
feasible today. An improvement in the transport facility has
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made the interaction between the retailer and manufacturer
easier; the need for a wholesale market is gradually
diminishing.
Retail Market
The retail market in India is currently witnessing a boom. The
growth in the India commodity market is largely attributed to
this boom in the retail market. Policy reforms and liberal
government policies have ensured that this sector is growing at
a good pace. Some of the reasons attributed to the growth of
retail sector in India include the large population of the country
who has an increased purchasing power in their hand. Another
factor is the heavy inflow of foreign direct investment in this
sector. More than 80% of the retail industry in the country is
concentrated in large cities.
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INDIAN COMMODITYEXCHANGES:
There are more than 20 recognized commodity futures
exchanges in India under the purview of the Forward MarketsCommission (FMC). Commodity futures exchanges are divided
majorly into two categories:
oNational exchanges
oRegional exchanges
Th
e four exch
anges operating at th
e national level
oNational Commodity and Derivatives Exchange ofIndia
Ltd. (NCDEX)
oNational Multi Commodity Exchange ofIndia Ltd. (NMCE)
oMulti Commodity Exchange ofIndia Ltd. (MCX)
o Indian Commodity Exchange Ltd. (ICEX)
There are more than 15 regional commodity exchanges in
India.
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WHATISICEX???
INDIAN COMMODITY EXCHANGE LIMITED (ICEX) is a screen
based on-line derivatives exchange for commodities and has
established a reliable, time tested, and a transparent trading
platform. It is also in the process of putting in place robust
assaying and warehousing facilities in order to facilitate
deliveries. It is jointly promoted by Indiabulls Financial Services
Ltd and MMTC Limited, and other partners- Indian Potash Ltd.,
KRIBHCO and IDFC.
This exchange is ideally positioned to tap the huge scope for
increasing the depth and size of commodities' market and fill inthe structural gaps existing in the Indian market. Our head
office is located in North India (Gurgaon), one of the key
regions in India's Agri belt, with a vision to encourage
participation of farmers, traders and actual users to hedge their
positions against the wild price fluctuations.
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Corporate vision:
Provide fair, transparent and efficient trading platform to all
participants
Meet the international benchmarks for the Indian
commodity market
Provide equal opportunity and access to investors all over
the country through the modern communication modes
Attract a wide array of end users, financial
intermediaries and hedgers
Become a major trading hub for most of the
commodities
To provide product portfolio to suit the trading
community needs in an efficient manners
Provide the widest range of benchmark future products
available on any exchange, overing all major commodities. Our
collective vision is global growth, innovative product
development, continually enhanced echnology and the highest
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level of service available on any exchange. We offer future
trading in Agricultural commodities, bullions, base metals, and
energy.
To serve customers with a global product line,
virtuallyround-the-clock electronic trading and strategic
alliances with other leading players. We also offer a
number of programs and products designed specifically to
appeal to a global audience.
Key differentiators:
y Joint venture between Public/Private entities Well capitalized
Rs. 100 Cr initial capital Reputation of partners and pan India
presence
y Key stake holders having rich experience in the domain viz.
commodities, warehousing, financial markets
y Professionally driven exchange with an entrepreneurial
mindset
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y Aim to remove discrepancy in the commodities market by
building transparency in the exchange
y Unprecedented price transparency and market depth
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SHAREHOLDERS & SHAREHOLDING PATTERN:
` Reliance Exchange next Ltd (RNext):
a wholly owned subsidiary of Reliance Capital, represents Reliance
entry into Exchange vertical. RNext aims to be present across asset
classes in the Exchange space.
Reliance Spot Exchange (RSX) is the first such initiative from RNext. RSX
focus on creating a unique value added proposition in the existing spot
market. RSX aims to bring together the regional spot markets on a
national level, through a single electronic marketplace for physical
delivery through e-auction in agricultural and other commodities.
RSX offers additional services such as Quality assaying, testing, grading,
warehousing, collateral management, financing, to bring about
transparency, efficiency, modern technology and integrated solution to
the market participants
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MMTC Ltd:
a Government of India enterprise, is the largest international trading
company ofIndia having annual turnover of more than US$ 7Billion or
Rs. 36000 Crore. It is among the leading international trading company
of South Asia having experience of more than 45 years in bulk trading of
diverse commodities and products.
It is present in 56 locations in India through offices, warehouses, port
offices & retail outlets. It is the largest exporter ofMinerals and single
largest importer/supplier or Bullion & Non-Ferrous Metals in India.
MMTC is also leading in trading of Agro products Fertilizers, Coal &
Hydrocarbons textiles, chemicals etc.
MMTC Ltd has a fully owned subsidiary, MTPL in Singapore and also a
promoter ofNINL in Orissa, an Iron & Steel plant MMTC Limited, and
Indias first Super Star Trading House, continues to be the
country's leader in mineral exports for four decades now. During
the last decade, MMTC could withstand the stiff competition in the
world market by its continuous and persistent efforts in diversifying its
markets, enlarging its product range, expanding extensively its
infrastructure facilities and expertise in mineral operations, and by
attaching utmost care and importance to its trade commitments as also
the quality of service and products.
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MMTC has provided further fillip to value addition to minerals. The 1.1
million ton Steel Plant consumes about 2 million tons of various types
of minerals annually being supplied by MMTC. The company has also
taken an initiative to link import of capital equipments required for
modernizing mining activities in the country to promote export of
minerals. The import of the earthmoving equipments was linked to
export ofIron Ore under EPCG scheme.
Items of trade
IRON ORE
MANGANESE ORE
CHROME ORE
OTHERS
(Mud Chemicals, Barytes, Bentonite, Bauxite, Talc, Gypsum,
Feldspar,
Quartz/Silica Sand, Garnet Sand, Kaolin (China Clay),
Vermiculite)
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Destination of exports
MMTC exports Iron ore to Japan, South Korea, China, Middle East etc.
The export is both on the basis of long term and annual spot contracts.
Leader in mineral exports
MMTC's performance in mineral trade has been acknowledged by the
CAPEXIL (Chemicals and Allied Products Export Promotion Council) by
conferring the nation's highest award for excellence in mineral
exports 13th time in succession.
Mode of sales
MMTC's mineral sales are on FOB basis only.
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` Indiabulls Financial Services Limited:
is part ofIndiabulls Group, one of the top business houses in the country with
business interests in Real Estate, Infrastructure, Financial Services, Retail,Multiplex and Power sectors. Indiabulls Financial Services is one of India's
leading and fastest growing private sector financial services companies.
Indiabulls Financial Services is an integrated financial services powerhouse
providing Consumer Finance, Housing Finance, Commercial Loans, Life
Insurance, Asset Management and Advisory services. The company is focused
on providing multiple financial services through an extensive network of
customer touch-points covering tier I, tier II and tier III cities. Indiabulls serves
more than 500,000 customers across different financial products through its
branch network, call centers and the Internet. It also ranks among the top
private sector financial services and banking groups, in terms of net worth.
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` Indian Potash Ltd:
the biggest canalizing agency (State Trading Enterprise) for import ofUrea and
other fertilizers on behalf of Government of India, is a major player in Indian
Fertilizer Industry with offices and dealers network across the country. Thisnetwork is serviced by a huge chain of Warehouses (total capacity 8 lakhs MT)
spread across the country.
Shareholder Shareholding Pattern
Reliance Exchangenext Ltd. 26%MMTC Limited 26%
Indiabulls Financial Services Limited 14%
Indian Potash Limited 10%
KRIBHCO 5%
IDFC 5%
Others 14%
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SWOTANALYSIS:
Strengths:
y Well established Brand Name
y Pan India reach through established equity terminals
y First Public Private commodity exchange
y Efficient delivery mechanism through accredited
warehouses
y Collaboration with BBA biggest bullion association
Weakness:
y Late arrival in the market
y Staff not well trained
y Spread is not narrow
y No proper marketing strategies
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Opportunities:
y Vast potential in market
y More product in product portfolio
y In future players like mutual funds can invest in
commodity market
y In future they can be their own clearing house
Threats:
y Big Players like MCX and NCDEX are major threat
y Macro environment factor
y Upcoming exchanges are another threat to the security of
ICEX.
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RECOMMENDATIONS:
After a long journey with ICEX certain recommendations that
can help them generate some business are as follows:-
y They can be their own clearing house: - Since ICEX has a
tie up with GLOBE they are not able to generate more
business from their customers and also they cant give
their customers a benefit over clearing and settlement.
Hence they can have their in-house clearing house.
y They can add more products in portfolio: - The product
portfolio ofICEX is very small and is focused mainly on
gold. Hence the customer base ofICEX is very small. Sothey should try to increase their products.
y More focused marketing strategies: -ICEX can work upon
its marketing strategies to increase the customer base and
increase volumes over trade. Their marketing strategies
can include:
Free memberships
Large discounts on trading on special days.
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Privileges to customers who trade on ICEX over a
specific amount of volumes.
y Add more associations like BBA to their cliental: - Since
there is only one association in their cliental that is
generating business for ICEX so it should try to capture
more of such organizations that can help it generate more
business. One such step was the MARCOMM PROJECT
initiated by ICEX to generate awareness about ICEX and
commodity trading in other jewellery associations in
Mumbai.
y Proper training to staff to handle financial queries should
be given: -More staff training is necessary for improving
efficiency of the business. Generally the sales people are
not completely aware about the terms and conditions of
the business and so they create a wrong impression about
the company in the minds of consume
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WEBSITE COMPARISON
Parameters MCX NCDEX NMC ICEX Comments
Appearance
Positioning Scattered Appropriate Ideal average
Compact No Yes Yes No
Design Lacklusture Ok Good Ok
center
picture
Dull Good Best good NMCE
picture
animated s
good
color theme Dull Ok Ok good ICEX goin
with
Indiabulls
Charts Stagnant Responsive Responsive no
chart
Language
options in
other
Yes No No No Hindi an
Gujarati
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languages option
MCX
user friendly
language
Yes Yes Yes Yes
Informative
Updates Ok Better Best ok
top gainers
and losers
No Yes No yes
Offers Attractive No Yes no
Parameters MCX NCDEX NMCE ICEX Comments
membership
details
Attractive Organized Both No phone
numbers
MCX
Feedback Yes Yes Yes No
enquiry
details
No No Yes No
News No Yes Yes No
Quotes No No Yes No NMCE
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provides
quotes of a
commoditi
member
account
No No yes No specific are
for membe
trade
calendar
No No yes No
member
calendar
No Yes no No
Partners Yes Yes yes Yes good
utilization
space b
NMCE b
not ICEX
knowledge
hub
Yes Yes yes Yes best
NMCE, ICE
provides
user manua
OTHERS
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trading
portal
No No yes No live mark
in differe
languages,
interactive
general
enquiry
No No yes No
searchengine No No yes No
Parameters MCX NCDEX NMCE ICEX Comments
online
membership
No No yes No
Parameters MCX NCDEX NMCE ICEX Comments
mobile feeds Yes No yes No
rss feeds No No yes No
Animations Offers None everything
best
No
LACUNAS scattered
information
lack of
animation
losers and
gainers
space wasted o
partners
user lack of repetitive tabs
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friendly to
a limit
offers
stagnant chart less information
USP mobile
feeds
Charts live market colour
theme
language
option
compact
design
animation picture
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OBSERVATIONS:
After comparing the websites of different commodity
exchanges the observations are:
1)As far as websites appearance is concerned NMCE and
ICEX are far ahead of other two exchanges.
2)Coming to language options MCX website is available in
two most important languages that is GUJARATI and HINDI
in which most of the commodity trading is done.
3)Coming to the information pattern, NMCE has the
maximum information available on its website including
price quotes of all the commodities and also the
membership details.4)NMCE also makes perfect use of space and shows price
feeds in different languages. Also its website has complete
user manual.
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RECOMMENDATIONS:
The comparison of different websites has led to the following
recommendations:
1)ICEX should come up with different language options so
that people can easily communicate with the website and
also the level of complications reduces to a larger extent.
2)ICEX should also include charts and graphs for different
parameters so that the traders work becomes rather
simple.
3)They can also come up with live market price feeds and
situations to make the website more interactive.
4)The company should also attach testimonials of varioustraders that are presently trading through ICEX portal
which gives a good impression about the company.
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ICEX SCOPE.
Of all the people trading online only 16% people trade
through ICEX.
This shows that ICEX has a lot of potential to grow and to
increase its customer base.
However for this ICEX has to implement aggressive
marketing strategies like compensation schemes for
traders who trade in larger volumes. Also setting certain days free for trading on the exchange
will help in increasing the customer base.
The people trading in commodities online have very less
knowledge about ICEX.
Also the people who are trading on ICEX has just one thing
in favour of it is that it has very less transaction cost.
For this the company should try to make more attempts to
increase its USPs.
They should try to make more attempts to make people
aware about their less transaction cost and other value
added services like cheaper memberships and also free set
up of its software.
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ICEX has not been able to provide sufficient information to
its customers.
To face this challenge they should try to make more
advertisements in different media and try to ake more
awareness campaigns.
Most of the people said that they are not at all satisfied
with their services since ICEX has not been able to settle
disputes between their members.
For this ICEX should make more stringent laws to avoid
such problems in the future.
The survey also showed that MCX is the most
accountable organization in case of any kind of
disputes.
For this ICEX should study as how MCX handles its
operations if there is any kind of settlement
disputes.
ICEX should also try to enforce stringent laws to
avoid any kind of Disputes among the parties.
This will not only help ICEX to retain its customersbut also to capture new customers that had some
issues with other exchanges
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BIBLIOGRAPHY:
y www.ncdex.com
y www.icexindia.com
y www.mcxindia.com
y Investopedia.com
y Scribd.com
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Indian Commodities Exchange Limited [ICEX]
Location Gurgaon , Started in November 2009
It is jointly promoted by Indiabulls Financial Services Ltd and
MMTC Limited. Other partners- Indian Potash Ltd., KRIBHCO and
IDFC
ICEX is India's third commodity exchange and offers contracts
primarily in metals and energy
Its current average daily turnover is Rs.15-20 billion as against
200 billion for MCX and 35 billion for NCDEX
ICEX PRODUCTS:
Precious metals: Gold, Silver
Metals: Copper, Lead
Energy: Crude oil, Natural gas
Oils& Oilseed complex: Mustard seed, Soyabean, Soyaoil
Fibers: Raw jute
Other Agro products: Mentha oil, Minerals ,Iron ore
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TABLE OF CONTENTS
SR.NO. TOPIC
1 WHAT IS COMMODITIES MARKET
2 INTRO TO INDIAN COMMODITY MARKET
3 INDIAN COMMODITY EXCHANGES
4 ICEX INTROUCTION
5 SHAREHOLDERS OF ICEX
6 SWOT ANALYSIS
7 RECOMMENDATIONS (SWOT)
8 WEBSITE COMPARISON9 OBSERVATIONS(COMPARISON)
10 RECOMMENDATIONS(COMPARISON)
11 ICEX SCOPE
12 BIBLOGRAPHY
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