The Foundation of a New Financial Architecture in the Philippines
The Commodities Exchange
The practice of commodities exchange worldwide is to ensure the efficient delivery of the products sold on spot or futures basis, and its payment.
In the Philippines, there is no Commodities Exchange to speak of, which is structured on the basis of physical delivery of products on "spot market", except for daily quotations of local commodities such as copra oil, sugar, corn, etc.
This is because the market is currently disorganized and controlled by 'cartel -like' operations by big businessmen and groups of companies who profit in this trade.
Having a Commodities Exchange basically opens up the market for small and big players with the same level at the playing field. Each are given the chances to submit bids for prices of products being sold in the Exchange. At the same time, the Sellers are given the chances to submit their offers at the best price possible.
The innovation of the Commodities Exchange is that the 'spot market', only products controlled and delivered at the registered and bonded warehouses nationwide shall be approved for sale at the Exchange. The buyers are also checked for their cash position and liquidity.
Speculations shall be discouraged in the Exchange. This is the reason that the 'futures market' will have to be structured in such a way defaults are minimized or totally avoided.
Overall, the Commodities Exchange will have to be structured in such a way that a transparent pricing and delivery system will be applied involving a secured warehousing system or depots for physical stocks, be it in the form of metals, mineral ores, agricultural products, fisheries and meat products.
The Commodities Exchange shall guarantee the performance of the Sellers and the Buyers.
In the Philippines, there is no Commodities Exchange to speak of, which is structured on the basis of physical delivery of products on "spot market", except for daily quotations of local commodities such as copra oil, sugar, corn, etc.
This is because the market is currently disorganized and controlled by 'cartel -like' operations by big businessmen and groups of companies who profit in this trade.
Having a Commodities Exchange basically opens up the market for small and big players with the same level at the playing field. Each are given the chances to submit bids for prices of products being sold in the Exchange. At the same time, the Sellers are given the chances to submit their offers at the best price possible.
The innovation of the Commodities Exchange is that the 'spot market', only products controlled and delivered at the registered and bonded warehouses nationwide shall be approved for sale at the Exchange. The buyers are also checked for their cash position and liquidity.
Speculations shall be discouraged in the Exchange. This is the reason that the 'futures market' will have to be structured in such a way defaults are minimized or totally avoided.
Overall, the Commodities Exchange will have to be structured in such a way that a transparent pricing and delivery system will be applied involving a secured warehousing system or depots for physical stocks, be it in the form of metals, mineral ores, agricultural products, fisheries and meat products.
The Commodities Exchange shall guarantee the performance of the Sellers and the Buyers.
