Mercantile Exchange Nepal Limited
Mercantile Exchange Nepal Limited or MEX is Nepal’s one of the premier commodity exchange which has introduced Automated Trading System (ATS) in commodity trading for the first time in the history of Nepalese Commodity Market. Considered as leading commodity exchange, MEX was established on August 14, 2007 and started its operations from January 5, 2009.It is located at Alliance Tower, Fourth Floor, Charkhal,Dillibazar, Kathmandu, Nepal. MEX provides the state-of-art electronic commodity trading platform that facilitates online trading and clearing & settlement operations for commodity trading across the country, offering 17 commodities for trading and more than 30 contracts of commodities to choose from any time across precious metals, base metals, energies products, agro products etc.
Trading Mechanism at MEX
MEX Nepal has a different set of contracts for each commodity and separate delivery months for various products as well. Trades on these contracts are otherwise settled on daily basis at the Daily Settlement Price, till the final settlement of commodity on the expiry date. MEX business model is based on pure order matching system with console made with the latest cutting edge technology that enables price discovery for local deliverable products. Exchange provides the reference price to the Market Makers (MMs) for the listed products. MMs can choose competitive spread and can show their intentions of Buy and Sell quantity for different contracts; however the spread shall be within the maximum limit permitted by the Exchange. MMs must show their intentions of both buy and sell quotes, which will be available to all the clients and matching will be done based on Price-Time-Priority via Automated Trading System (ATS).
Market Participants at MEX
Clearing Member (CM): Clearing Member (CM) is the registered institution with financial requirements as prescribed by the Exchange, which does the clearing and settlement of all the trades of their respective clients along with other administrative works like providing margin leverage, customizing transactional fees, client registration, introducing brokers/sub-brokers, margin-call updates, offline support etc. They also act as a Market Maker, while clearing the given trades. Moreover, they can appoint other Market Makers, Brokers, Sub-Brokers as well.
Market Maker (MM): Market Maker is any individual or institution, independent or appointed by CM, registered with the Exchange who quotes Bid and Ask prices for various contracts simultaneously, by which the market depth is created and the best prices are generated to execute the orders initiated by the clients. They also trade for profit making, but their orders get executed and matched when there are quotes available for Best ASK/BID and if any client takes market order, or any other market makers close their open positions or clients’ limit/stop orders reach to the level of Best ASK/BID price. However, they also can close their open position any time during the trading session.
Broker/Sub Broker: A Broker or Sub broker means an individual or institution licensed by Clearing Member in accordance with criteria prescribed by the Exchange. A broker/sub broker will act as a market facilitator to traders, providing advisory services, and informed about any concerns regarding trading opportunities and handling grievances.
Client: Clients are the actual traders i.e. speculators, hedgers or arbitrageurs in the market, trading for risk mitigation arises from price volatility or profit-making from price volatility itself.
Products
- Commodity Futures
-Precious Metal – Gold, Silver, Platinum, Palladium
-Energy – Brent Crude, Crude Oil, Natural Gas, Heating Oil
-Base Metal – Copper
- Agriculture – Cocoa, Coffee, Corn, Cotton, Soybean, Soybean Oil, Wheat, Sugar
- Commodity Spot
-Precious Metal – Gold, Silver
-Energy – Brent Crude, Crude Oil, Natural Gas
- Base Metal - Copper
Trading Hours
There are 6 trading days, i.e. from Monday to Saturday. The market at MEX opens at 03:45 Hrs and Session halt at 23:59:30 Hrs on Monday, from 00:00 Hrs till 23:59:30 for Tuesday and so forth till Friday, and from 00:00 hrs to 02:00 hrs on Saturday. Market halt from 23:59:30 to 00:00:00 hrs (for 30 seconds) for all day during which order entry and modifications are not allowed.
Affiliation
MEX has affiliation with different national and international associations which enables to attain greater heights in its constant endeavor for information sharing to expand the business horizon. MEX is the first ISO 9001:2008 certified commodity exchange, which is also affiliated with South Asian Federation of Exchanges (SAFE) under the affiliate membership and the only exchange to have Full Membership of Association of Futures Markets (AFM), Buenos Aires, Argentina. MEX Nepal has also taken the commodity market in Nepal to a very new level by signing MOU with Chicago Mercantile Exchange (CME) for the international information sharing between MEX Nepal and CME Group, which shows that MEX’s services and parameters are equal to the global standards.