Page 1 - MEX Express - Vol 15

Mercantile Exchange Nepal Limited
Invest - Trade - Earn
An ISO 9001:2008 Certified Exchange
KYC: Coffee
Page 2
From the CEO’s Desk
Iwould take this opportunity to take you
back to 18th November of this year when
we came across the news headline “SEBON
TO BRING COMMODITIES ACT” in the
national daily The Himalayan Times. After
the successful launch of new state-of-the-art
technology based trading software AX1 with extremely wonderful
feedback on the same from the trading society, we are keen enough
to launch further more facilitating software for our investors and I
am glad to share that the Market Making software of global standard
would be launched soon after the required tests are performed.
Since the Constituent Assembly election is over now, we are
extremely hopeful from the upcoming parliament and the
government on getting some concrete document to regulate the
commodity market in the country. And such news suggesting that
the work on document is very progressive definitely encourages us
to strengthen and upgrade our standards. The effects of the election
are already seen in the capital market where the NEPSE Index has
already reached above its four year high. The financial literacy of
general public is also increasing; therefore SEBON has been positive
enough to embrace the upcoming opportunities with the globally
accepted commodity market principles. As in previous days, MEX
Nepal is in regular discussions with the concerned authorities and is
ready to extend any level of support for the document.
With our software for the Market Making to be launched soon in
the market, we will be able to make the overall trading scenario
more transparent. Besides that, such feature will also reveal that
the Nepali market is prepared enough to flourish more. And with
the development of such software, local agricultural products of the
market can also be introduced in the trading with the full-fledged
option of physical delivery too, which is an integral component of
a successful commodity exchange worldwide. MEX Nepal is aware
of this challenging scenario and this is the reason why it has been
coordinating with other counter parties in the market to make the
trading of local agro products possible in the platform with the
option of physical delivery.
I would also like to inform that MEX Nepal is continuously working
with all its efforts to materialize its endeavor of contributing to the
Nepali economy in every way possible. MEX Nepal will always
uphold the expectations of its valuable traders and will justify the
same with all its hard work and efficient work-style. Progressions
are always led by dreams and MEX Nepal dreams the best way!
MEX EXPRESS - Jitesh Surendran
CEO, MEX Nepal
www.facebook.com/mexhome
MEX EXPRESS
A Smart Solution for Online Trading
www.mexnepal.com
Volume: 5 • Issue: 3 • Year: 2013 A.D
MEX News Portal Market Perspective
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Cornered The Yellow Metal!
Indeed some of the best ideas come to us when we are in socially awkward times like in restroom or while driving in
along to the office. However, this analysis came to my mindsomewhere from the place, what exactly is “CORNERING THE
MARKET”. I am confounded,how is market being cornered or I should say; how apple is cornering the market of mobile device,
how china is cornering the urbanotomy mediator. What about Las Vegas magazine cornering the market?
Then I realized, as an employee in the Financial Institution I should corner all these ideas and start thinking about what
happens when dragons in a den want to corner the particular proposition of the market. Let’s go with example to see what is
cornering the market: let’s assume that a dragon wants a profit by cornering the market on ABC Company. First, he accumulates
the shares of the company and with the continual buying of shares; the values of shares will go up in the current market. The
rising of price will attract more buyers and the demand pushes prices up even more. Through a short squeeze, short sellers are
thrown out of the market which again increases the price of shares in the company. Now, it’s time for the dragon to sell the shares
at the artificially ballooned price or can exit from the investment knowing that the price of the shares will fall once the normal
supply and demand force return.
There are series of event held in the past names like rouge copper trader from Sumitomo and the hunt brothers who have
cornered the markets. The only query could be whether the team did right or wrong to the market, being one of the market
participants oneself. However, this kind of practice is still in the market today with the name of JPMorgan. They have been
doing it in COMEX gold futures not only in these years but since five years. They acquired substantial gold and silver short
positions of Bear Stearns in March 2008 which was published Commitments of Traders (COT) and Bank participation Reports.
The pundits say JPMorgan is a serial market manipulator who remains in both sides in the cornering the market i.e. on the
short side of the markets until the current long corner in the gold. Looking at the facts and figures for the last 4th of December
JPMorgan had a net short position in COMEX gold futures of approximately 75000 contracts which represents 20.5% of the true
net open interest on that date where gold was at $1700. No one would say that there is any chance of manipulation and a corner
on the short side of the market where 20.5% share of a major regulated futures market by a single entity.When the price of gold
had declined by $500 in the first half of 2013, JPMorgan booked profit of over $ 2 billion.In total, what we can observe is that
cornering the market is determined by what large percentage is cornered in the market? Like a diamond seller who knows where
the market is heading.
Moreover, if we talk about cornering the market then we must have to make an analysis that how legal it is? There is saying
“the big fish goes free and the small fish get fried”.
The sources say there are lots of parameters and legal proceedings to counter these situations. Though US president has
introduced and supported the Volker Rule, these big fish have found the loopholes to piece into the market. Meanwhile, US
planned to arrest two former JPMorgan chase employee in big Bank loss and another source said JPMorgan is close to reach
a settlement with the securities regulators over the trading loss. The Obama administration is working hard to prevent insured
banks from speculating with their money after the financial giant JP Morgan lost billions of dollars. Therefore,July came up with
the final version of Volker rule which will allow the banks to make broad bets similar to the one that landed JPMorgan in so much
trouble.Now, netting is iron-wired that big fish can also be in troubled. The post-rule effects are yet to be seen!
Sharad Koirala
Assitant Manager
Research and
Development
Department
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