30.05.2016, 11:32
Oil Product Trading Redefined
OREANDA-NEWS. Exchange-traded contracts for oil product supplies now come with a 100 percent guarantee provided that such contracts are made through a commodity supply operator.
The Bank of Russia has decided to accredit a commodity supply operator on organised oil product market of the Saint-Petersburg International Mercantile Exchange (or SPIMEX). The company, accredited in this capacity, operates one of the largest oil depots in Northwest Russia. Some of the depot’s total capacity, equalling 70 thousand tonnes of oil products, will be earmarked for exchange trading.
The Bank of Russia’s high priority tasks include the development of commodity exchange trading and the efforts to ensure that obligations under exchange-traded supply agreements are met. Seen as an important milestone on this way, this new concept of a commodity supply operator seeks to warrant that a supply agreement is one hundred per cent executed. This may be accomplished through a scheme whereby the clearing organisation would authorise the transfer of property rights to the commodity, with the commodity physically exiting the depot only if authorised by the clearing organisation. The operator would open trading commodity accounts with the clearing house, to keep records of the operator-stored commodity.
Traders will be able to go to SPIMEX to buy small-scale wholesale lots of oil products (100+ tonnes) with guaranteed delivery and shortly collect the goods for further resale. Importantly, commodity supply operations would help cut down the time needed to deliver on a contract from the current thirty days to the statutory timeframe of three.
Moving forward, the timeframe of transactions is set to be contracted even further so the settlements are complete at the date of the agreement, making the delivery versus payment scheme a reality.
The commodity operator concept is envisaged to become a key component in the organised oil product market and to bring it integrity, while also enhancing the reliability of the overall infrastructure of the Russian commodity market.
The Bank of Russia has decided to accredit a commodity supply operator on organised oil product market of the Saint-Petersburg International Mercantile Exchange (or SPIMEX). The company, accredited in this capacity, operates one of the largest oil depots in Northwest Russia. Some of the depot’s total capacity, equalling 70 thousand tonnes of oil products, will be earmarked for exchange trading.
The Bank of Russia’s high priority tasks include the development of commodity exchange trading and the efforts to ensure that obligations under exchange-traded supply agreements are met. Seen as an important milestone on this way, this new concept of a commodity supply operator seeks to warrant that a supply agreement is one hundred per cent executed. This may be accomplished through a scheme whereby the clearing organisation would authorise the transfer of property rights to the commodity, with the commodity physically exiting the depot only if authorised by the clearing organisation. The operator would open trading commodity accounts with the clearing house, to keep records of the operator-stored commodity.
Traders will be able to go to SPIMEX to buy small-scale wholesale lots of oil products (100+ tonnes) with guaranteed delivery and shortly collect the goods for further resale. Importantly, commodity supply operations would help cut down the time needed to deliver on a contract from the current thirty days to the statutory timeframe of three.
Moving forward, the timeframe of transactions is set to be contracted even further so the settlements are complete at the date of the agreement, making the delivery versus payment scheme a reality.
The commodity operator concept is envisaged to become a key component in the organised oil product market and to bring it integrity, while also enhancing the reliability of the overall infrastructure of the Russian commodity market.
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