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Memorandum of Understanding signed with Government of Madhya Pradesh on May 26, 2007

Memorandum of Understanding signed with Government of Madhya Pradesh on May 26, 2007.

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Memorandum of Understanding signed with Government of Madhya Pradesh on May 26, 2007

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  1. www.nationalspotexchange.com

  2. Memorandum of Understanding signed with Government of Madhya Pradesh on May 26, 2007 Mr. M. A. Khan, IAS, Commissioner Mandies & MD , Madhya Pradesh State Agricultural Marketing Board exchanging MoU with Mr. Anjani Sinha, MD & CEO, NSEL in the august presence of Hon’ble Chief Minister of Madhya Pradesh Shri Shivraj Singh Chouhan www.nationalspotexchange.com

  3. Government of Gujarat granting License to NSEL 10th October 2007 Shri Shankerlal Guru, Chairman, NSEL receiving E Market License from Hon’ble Minister of Agriculture, Government of Gujarat Shri Bhupendrasinhji Chudasama www.nationalspotexchange.com

  4. Memorandum of Understanding signedwith Government of Rajasthan on November 30, 2007 Mr. Ashish Bahuguna, IAS, Principal Secretary, Govt. of Rajasthan signing MoU with Shri Anjani Sinha, MD & CEO, NSEL in the august presence of Hon’ble Chief Minister of Hon’ble Chief Minister Smt. Vasundhara Raje www.nationalspotexchange.com

  5. National Spot Exchange – Project Outline • A National level Electronic Transparent institutionalized spot market. • A market place where farmers, traders, corporates, processors and importers can sell and buy at the best possible and competitive rates. • Provides counter party guarantee in respect of all trades. • Provides services like quality certification, storage of goods and other customized value added services. • Will strengthen the futures market by creating a delivery platform, which can be used by the buyers and sellers to procure / dispose off farm produce, industrial goods, metals, etc. • With the launch of NSEL, the canvass of commodity trading would be complete – India will have both spot and futures market available on electronic platform with national reach. www.nationalspotexchange.com

  6. Financial Technologies, a leading software company having presence in the entire financial market NAFED, a national level co-operative having presence in major farm produce Promoters of NSEL www.nationalspotexchange.com

  7. Shri Shankal Lal Guru – Chairman Noted Agriculture activist Chairman of Guru Committee formed by Govt of India, which drafted Model APMC Act Shri Jignesh Shah – Vice Chairman Founder, CMD of Financial Technologies Group Has over 17 years of experience in the Securities and Commodities Exchange Industry Shri Anjani Sinha – Managing Director and Chief Executive Officer Director of MCX Having 18 years of experience of Stock and Commodity Exchanges Shri B.D Pawar – Director Editor of CITA having 40 years experience in Agriculture Marketing Shri Joseph Massey – Director Managing Director and Chief Executive Officer of MCX Having 18 years of experience with LIC, RBI, SHCIL and Stock Exchanges Shri V. Hariharan – Director Director-Technology of FTIL and Director of MCX Having 25 years of experience in Business Enterprise Technology Solutions and Strategy Board of Directors www.nationalspotexchange.com

  8. Contract Specifications • Trading related • information • Opening of contracts • Trading unit • Tick size • Quotation / Base value • Price quote • Daily price limits • Initial margin • Maximum order size • Delivery related • information • Delivery unit • Delivery center(s) • Quality Specifications • Grades • Standards etc. • Tolerance limit for quality / quantity - discount/premium www.nationalspotexchange.com

  9. Trading Mechanism • All contracts with single day duration • All positions outstanding at end of day will result into compulsory delivery • Fully automated screen-based trading system • National reach • An order driven trading system • Transparent, Objective and Fair system for automatic order matching • Identity of the trader undisclosed • Flexibility for placing orders www.nationalspotexchange.com

  10. Delivery both in physical and demat. Delivery and pay in dates: Gold and silver: T + 1 Agri commodities: T + 3 / T + 4…., commodity-specific, depending upon time lag in quality checking Clearing and settlement www.nationalspotexchange.com

  11. Agri commodities / Farm Produce Commodities deliverable in Gujarat, Maharashtra, Karnataka, Bihar and Kerala Separate contract for specific delivery center Contracts to map every important arrival mandi and consumption center Contracts deliverable in other States to be launched as soon as we get license in those States Bullion Separate contracts for each center Industrial commodities Non ferrous metals, industrial chemicals Buyers and sellers in all these contracts can be from any location, but delivery will be on ex warehouse basis as per specification Depending upon need of the members, any number of contracts can be launched. Contracts to be traded www.nationalspotexchange.com

  12. NSEL Network Platform www.nationalspotexchange.com

  13. NSEL Trading (Bid / Ask) On – Line Terminal On – Line Terminal Matching Clearing House Member/Broker Member/Broker Clearing Bank Buyers Corporate Wholesalers Exporters Traders Government Seller Farmer Contract Farmer Importers Cooperatives Government Settlement Warehousing / Logistics Physical Delivery Trading, Clearing and Settlement Mechanism – a Flow Chart www.nationalspotexchange.com

  14. NSEL will enroll members across the country. Members will expand trading terminals through branch, sub brokers and franchises. A trader can become a member directly or he can trade through any member. A trader will sell his commodity in specific location delivery contract, deliver material at NSEL specific warehouse where quality will be checked against the contract specification notified by NSEL, if it confirms to quality standards, material will be accepted in the warehouse and WR will be issued, such WR can be tendered by the seller to NSEL towards his delivery obligation. Trading, Clearing and Settlement Mechanism www.nationalspotexchange.com

  15. NSEL will collect payment from the buying member through electronic debit, endorse the WR in favor of the buyer and credit the sale proceeds in account of the seller. In case of failure of seller or buyer, NSEL would auction against the defaulting party and obligation would be fulfilled in that manner. In case of default, NSEL guarantees all trades and maintains settlement guarantee fund for this purpose. Corporate buyers would be comfortable to buy through NSEL, because the quality will be guaranteed and pricing would be transparent. Trading, Clearing and Settlement Mechanism contd.. www.nationalspotexchange.com

  16. Members, sub-brokers and clients trading on NSEL platform will not need any APMC license to trade in agri-commodities. All compliance relating to market fee will be taken care by the Exchange. VAT compliance will be required in case of taxable items. Members can have state level license for VAT. Exchange will also make arrangements in this regard, who may charge nominal fee for such services. Legal Status www.nationalspotexchange.com

  17. Advantage of NSEL Platform • Compared to 2% - 3% brokerage in physical market. • Transaction fee in NSEL would be: • Non delivery based transactions: Rs. 10 to Rs 5 per lac based on turnover slabs. • Delivery based transactions: Commodity specific charges fixed on per lot basis, which will include loading, unloading, assaying and all other incidental expenses. This will vary from commodity to commodity and will be notified in advance. www.nationalspotexchange.com

  18. Advantage of NSEL Platformcontd.. • Desktop Monitoring • Efficient Warehousing and logistics support • Complete end to end solution • Guaranteed Trade with Weighment and Quality assurance • A New distribution channel with trade guarantee • A complementary market to derivative traders • Timely disbursement of commodities and funds • Transparency in transaction and settlement www.nationalspotexchange.com

  19. Advantages to the Traders • Traders would get a bigger and liquid market, where they can sell huge quantity. • Elimination of counter party risk, credit risk, rejection at buyer’s go-down at the time of delivery. Once they sell on NSEL and deliver in NSEL warehouse, they are free from all post trade risks. • Since large number of investors from all across the country would be available at NSEL platform, they can realise better price for their product. • Access to bank finance against warehouse receipts. • They can expand their activities to multiple commodities, because of operational ease, availability of finance and absence of counter party risk under NSEL system. www.nationalspotexchange.com

  20. Direct access to a national level market Farmers can quote their own selling price Reduction in cost of intermediation Increase in bargaining power Increase in holding capacity Loan against pledge of warehouse receipts Advantages to the Farmers www.nationalspotexchange.com

  21. Advantages to the Exporters • Exporters can buy certified quality material through a secured platform. • Hassles relating to procurement of material in physical market is completely avoided. • Exporters can save brokerage or commission payable to procurement agents. • Looking at the price available at NSEL, they can make export commitment and cover themselves immediately by buying at NSEL. www.nationalspotexchange.com

  22. Advantages to the End Users • The End Users can buy directly at competitive price • Operational comfort. Instead of contacting various suppliers or brokers, they can see the best prices on the system or they can submit their own buy prices too. • NSEL could function as a single window system for procurement of various materials. www.nationalspotexchange.com

  23. Advantages to Arbitrageurs • Advantage of cash-future arbitrage electronically. • Delivery fungible between spot and futures for common commodities and common delivery centers. • Disposal of deliveries received on futures market. • Jobbing and spread trading between cash and futures. www.nationalspotexchange.com

  24. Benefits to Futures Exchanges • Transparent spot price available for Due Date Rate calculation. • Ease of moving towards compulsory delivery contracts through structured spot market. • Healthy growth of futures market ensured through development of the structured spot market. www.nationalspotexchange.com

  25. Membership drive across the country Initially only Trading-cum-Clearing Members Admission based on capital adequacy norms viz. security deposit and financial networth Membership of the Exchange available to Individuals, Corporates, HUFs, Partnership Firms, Cooperatives etc. Admission process – application, compliance, interview and enrolment Training Mock Trading Membership of NSEL www.nationalspotexchange.com

  26. Admission Fee: Rs 5 lakh Non refundable, but membership transferable after 3 years Security deposit: Rs 5 lakh Refundable Annual Subscription: Rs. 25,000 Membership processing Fee: Rs. 5,000 Networth criteria: Rs. 20 lakh Membership criteria www.nationalspotexchange.com

  27. Hardware – Procured and installed Software – Developed and pilot testing done. Ready for Mock Trading by the Members Clearing banks – IndusInd Bank, State Bank of India, UTI Bank Ltd. and Union Bank of India Core team – Recruited and trained Quality Certification Agencies– Supported by NBHC Warehouses – Supported by NBHC Networking – Through VSAT, Leased Line and Internet Exchange Set-up www.nationalspotexchange.com

  28. Clientele business: To get a new set of clients from physical market To provide structured products regarding cash future arbitrage, etc. Jobbers and arbitrageurs Fungible deliveries between MCX and NSEL Cash future arbitrage Business potential for MCX members www.nationalspotexchange.com

  29. Existing VSAT users By installing separate IDU, they can connect to NSEL Leased line connectivity Separate leased line will be required Internet connectivity Connectivity for MCX members www.nationalspotexchange.com

  30. Thank You. National Spot Exchange Limited 4th Floor, Boston House, Suren Road, Chakala, Andheri (East) Mumbai - 400093. Tel: +91-22-67099300 Fax: +91-22-67099031  E-mail: info@NSEL.com www.nationalspotexchange.com

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