Commodity exchange

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Commodity exchange – a team of persons, devices and technical means ensuring all trading participants the same conditions for concluding exchange transactions and equal access at the same time to market information, in particular to information about exchange rates and prices of exchange commodities and trading in exchange commodities.

In a specific place and time, it confronts supply and demand, as well as the purchase and sale of mass goods, highly standardized in terms of quality and quantity. Depending on the supply-demand relationship, prices of goods are shaped here .

Objectives of the activity

The primary goal of a commodity exchange, which is at the heart of its operation, is to create a trading space so that members have facilities to trade specific goods.

The stock exchange should guarantee:

  • establishing appropriate rules for conducting business by its members,
  • creating the right place to trade and arranging the time,
  • creating uniform rules and standards for conducting trade,
  • introducing a uniform system of the size of contracts and exchange fees as well as the time and place of delivery conditions and fees,
  • collecting and disseminating price and market information for exchange members and the public,
  • creating a guarantee mechanism for concluded contracts and terms of payment for liabilities in connection with trade between members.

The commodity exchange operates as a company , and its shareholders are most often market agencies, foundations for economic development, banks , chambers of commerce and other participants (e.g. producers , wholesalers ), and recently also insurance companies .

Breakdown criteria

  • Due to the subject of rotation:
    • commodity exchanges – trading in standardized mass commodities for which typical features can be established,
    • money exchanges – trading in securities , foreign currencies and metals,
    • service exchanges – e.g. insurance and freight exchanges .
  • Due to its scope and importance:
    • national stock exchanges – e.g. Tokyo Sugar Exchange ,
    • international stock exchanges – eg the New York Coffee and Sugar Exchange.
  • Due to the type of transactions concluded:
    • exchanges conducting cash transactions – the physical commodity traded passes from the seller’s hands to the buyer’s hands at a place and time strictly defined by both parties,
    • exchanges conducting futures transactions – the commodity is not traded here, but the possibility of its purchase or sale in the future; for example, you can buy wheat that has just been sown.
  • Due to the scope of purchases made:
    • specialized exchanges – a commodity or a group of commodities is traded there, e.g. sugar or grain exchange,
    • commodity exchanges – trading many different commodities of the same type.
  • Due to membership access:
    • open exchanges,
    • exchanges closed.

The subject of trading

Commodity exchanges play a major role in trading agri-food products. The commodities that are the subject of the most vigorous stock exchange trading are:

  • cereals : wheat , maize , barley , oats , rye , rice ,
  • other goods plant : sugar , coffee , cocoa , soy ( grain , meal , oil ), seeds , and oil flax and rapeseed , cotton , rubber , potatoes , wood ,
  • goods of animal origin: live cattle and piglets , fattened cattle, beef and pork carcasses , broilers , eggs , wool ,
  • metals : copper , gold , aluminum , tin , zinc , lead , nickel , silver ,
  • raw materials and chemical products: crude oil , gasoline , diesel and heating oil , propane .

History

The first commodity and money exchange was established in 1531 in Antwerp.