Online Commodity

Trading Platform
By: Avinash Mallick
 Agenda

01 Commodity Trading Ecosystem

02 Need for Online Commodity Trading

03 Various Online Trading Processes

04 CSM’s Trading System & Impact

05 Application of Em-Tech

06 What’s Next?
Commodity Trading Ecosystem
Understanding Stakeholders

1 2 3

Grower / Farmer / Producer Silo / Warehouse / Storages Trading / Buyer / Broker

6 5 4

Exporters Packers / Blenders Transporters

 Commodity Trading Ecosystem
Actors involved in Commodity marketplace

BROKER BUYER
• Responsible for selling commodities • Responsible for purchasing commodities sold
on behalf of sellers. at the auction.

• Undertake activities related to

auction such as sampling and • View product catalogue & check samples of
cataloguing of commodities. commodities

• Fixing and modifying reserve price • Allocate budget for each commodity which
on behalf of sellers. is of interest .
Trading / Buyer / Broker
• Also undertake pre & post sale
documentation, collection and • Interested in securing supply at
deposit of taxes on behalf of competitive market prices by active
producers bidding with other buyers.
Need for Commodity Trading Platforms
Addressing Problem Statements in Manual Trading

1. Stagnating prices of commodities in auctions

2. Lengthy & bureaucratic commodity trading cycle

3. Manipulation of market by large oligopolies

4. High costs due to procedural & logistical issues

5. Limited time & information for fair price discovery

6. Poor quality of produce sold to commodity centers

CSM’s Solution
End to end Automation of Commodity Trading Ecosystem
Membership Management
Digital application of business rules on membership parameters

1. Registration of primary stakeholders & other participants (warehouses,

transporters & banks)
2. Profiling and verification of registered members on the platform
3. Definition of roles, responsibilities and hierarchy of members in the ecosystem
4. Customizable business rule-based allocation of roles and attributes
5. Access control and grouping based on parameters (subscriptions, geography or
organization)
6. Built-in workflow and multi-level approval system to bid, buy and sell
 Catalogue Management
Enhances visibility of commodities through aggregated information

1. Manage the creation, aggregation & access of pre-auction & auction catalogue by brokers
2. Support pricing decisions through price index exploration & search feature
3. Enable brokers to import quality checking & valuation information from 3rd party systems
4. Enable buyers to add their own parameters to catalogue for comparison & decision making
5. Provide filtering mechanism through standard text & keyword searching, commodity
attribute exploration, historical performance and product comparison features
6. Support diverse views of the catalogue for brokers and buyers
Auction Management
Forward Auction

1. Single Auction – Multiple Buyers Single Broker

2. Multi Auction – Multiple Buyers Multiple Brokers
3. Auto Bidding – System bidding for Buyers (Presets)
4. Voice over Bids – System voices the bids
5. Go-on Option – Allow buyer to buy similar lots at same
price.
6. Follow Favorites – System highlights the favorite Lots
marked by Buyers prior to auction.
7. Realtime Trading – Instant relay of Bids across Buyers,
Brokers and other users of the system.
Auction Management
Reverse Auction

1. Multi Slot Auction – Carry Auctions in multiple slots to

filter out buyers in each slot.
2. Maximum bids setup – Setting maximum bids for a Buyer.
3. Ceiling price setup – Define the Ceiling Price from which
auction bidding starts.
4. Floor price setup – Define the floor price which is the end
of the auction for that Lot.
5. Setting Bid Difference – Allowing buyers to gradually bid
until the floor price.
6. Buyer anonymity – Maintain buyer secrecy during bidding.
Business Management
Ensures traceability & accountability in transactions post auctions

1. Enables automation of post auction activities including sale invoice, payment

confirmation, order release document, delivery order & loading instructions
2. Support notification feature for all defined commodity trade transaction
documents and forms as per pre-defined approval hierarchy
3. Dynamic & distinct access functionalities for all trading partners including
producers, buyers, brokers, warehouses and banks
 Market Analytics & Insights
Decision support system for risk mitigation & ROI maximization

1. Historical analysis & Dynamic Reporting of all transactions & from other modules
2. Real-time accurate, realizable, & consistent price information on commodities in
trading hours
3. Synopsis of trading activity each day that includes opening price, closing price, highest
price, lowest price, traded quantity and worth, differential in the closing price of
current day vs previous day
4. Visualization of averages over time periods & performance comparison of different
commodities
5. Predictive modelling of future price curves over different delivery period contracts
Impact of Implementation
Success Achieved in an East African Tea Exporting Country

Parameters Manual – Outcry Automated

Auction Auction

Tea Trade Cycle Time 32 days 19 days

Period between tea offering & catalogue closure 5 days 2 days

Period between catalogue closure & auction date 19 days 10 days

Period between auction date & payment date T+9 days T+5 days

Period between auction closure & result 3 to 12 hours Real-time

dissemination
No. of documents handled 47 24
Auction speeds 3 lots/min 5 lots/min
 Future Roadmap
Opportunities for Application of EmTech

1. Blockchain : The entire supply chain can see the efficacy of the solution that links the supply chain
and creates transparency of transactions from beginning to end.

2. RPA : Automate the processes during cataloging to post-auction processes like generation of invoice
after sale and issuance of delivery order post payment of the invoice.

3. Predictive Analysis : Using Data Mining through Knime and Predictive analysis through Machine
Learning algorithm.

4. BI Tools : Allowing users of the system to generate on demand reports and forecast future sales
through Data visualizations.

5. Unmanned Weighbridge / IoT implementations : Removing Human error through an end to

end solution at the stockyard.
 What’s Next ?
Digitally Transforming Trade through Collaboration

1. Find Partners who can add value to this product with their own set of applications
2. Set Geographies where this product will work in either Capex-opex / Boot Model
3. Identifying all exchanges and commodity trade bodies in respective geographies where the need
of the hour is having an online system
4. Collaboration to enter other Markets –
South Asia – Rubber, Palm Oil
North America – Soybeans, Corn , Wheat
South America – Iron Ore , Cocoa
Africa – Tobacco, Coffee, Tea, Flowers
Australia - Coal
THANK YOU