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Mercantile Exchange Nepal Limited                                           MEX EXPRESS
         Invest - Trade - Earn                                                                         A Smart Solution for Online Trading
An ISO 9001:2008 Certified Exchange

                                                                                             Volume: 5 • Issue: 3 • Year: 2013 A.D

KYC: Coffee                                                                 MEX News Portal  Market Perspective

             Page 2                                                         Page 3           Page 4

From the CEO’s Desk                                                         Cornered The Yellow Metal!

       Iwould take this opportunity to take you                                 Indeed some of the best ideas come to us when we are in socially awkward times like in restroom or while driving in
                                 back to 18th November of this year when    along to the office. However, this analysis came to my mindsomewhere from the place, what exactly is “CORNERING THE
                             we came across the news headline “SEBON        MARKET”. I am confounded,how is market being cornered or I should say; how apple is cornering the market of mobile device,
                             TO BRING COMMODITIES ACT” in the               how china is cornering the urbanotomy mediator. What about Las Vegas magazine cornering the market?
                             national daily The Himalayan Times. After
                             the successful launch of new state-of-the-art      Then I realized, as an employee in the Financial Institution I should corner all these ideas and start thinking about what
technology based trading software AX1 with extremely wonderful              happens when dragons in a den want to corner the particular proposition of the market. Let’s go with example to see what is
feedback on the same from the trading society, we are keen enough           cornering the market: let’s assume that a dragon wants a profit by cornering the market on ABC Company. First, he accumulates
to launch further more facilitating software for our investors and I        the shares of the company and with the continual buying of shares; the values of shares will go up in the current market. The
am glad to share that the Market Making software of global standard         rising of price will attract more buyers and the demand pushes prices up even more. Through a short squeeze, short sellers are
would be launched soon after the required tests are performed.              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
Since the Constituent Assembly election is over now, we are                 supply and demand force return.
extremely hopeful from the upcoming parliament and the
government on getting some concrete document to regulate the                    There are series of event held in the past names like rouge copper trader from Sumitomo and the hunt brothers who have
commodity market in the country. And such news suggesting that              cornered the markets. The only query could be whether the team did right or wrong to the market, being one of the market
the work on document is very progressive definitely encourages us           participants oneself. However, this kind of practice is still in the market today with the name of JPMorgan. They have been
to strengthen and upgrade our standards. The effects of the election        doing it in COMEX gold futures not only in these years but since five years. They acquired substantial gold and silver short
are already seen in the capital market where the NEPSE Index has            positions of Bear Stearns in March 2008 which was published Commitments of Traders (COT) and Bank participation Reports.
already reached above its four year high. The financial literacy of         The pundits say JPMorgan is a serial market manipulator who remains in both sides in the cornering the market i.e. on the
general public is also increasing; therefore SEBON has been positive        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
enough to embrace the upcoming opportunities with the globally              JPMorgan had a net short position in COMEX gold futures of approximately 75000 contracts which represents 20.5% of the true
accepted commodity market principles. As in previous days, MEX              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
Nepal is in regular discussions with the concerned authorities and is       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
ready to extend any level of support for the document.                      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
With our software for the Market Making to be launched soon in              the market is heading.
the market, we will be able to make the overall trading scenario
more transparent. Besides that, such feature will also reveal that              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 Nepali market is prepared enough to flourish more. And with             “the big fish goes free and the small fish get fried”.
the development of such software, local agricultural products of the
market can also be introduced in the trading with the full-fledged              The sources say there are lots of parameters and legal proceedings to counter these situations. Though US president has
option of physical delivery too, which is an integral component of          introduced and supported the Volker Rule, these big fish have found the loopholes to piece into the market. Meanwhile, US
a successful commodity exchange worldwide. MEX Nepal is aware               planned to arrest two former JPMorgan chase employee in big Bank loss and another source said JPMorgan is close to reach
of this challenging scenario and this is the reason why it has been         a settlement with the securities regulators over the trading loss. The Obama administration is working hard to prevent insured
coordinating with other counter parties in the market to make the           banks from speculating with their money after the financial giant JP Morgan lost billions of dollars. Therefore,July came up with
trading of local agro products possible in the platform with the            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
option of physical delivery.                                                trouble.Now, netting is iron-wired that big fish can also be in troubled. The post-rule effects are yet to be seen!

I would also like to inform that MEX Nepal is continuously working                                                                                                                               Sharad Koirala
with all its efforts to materialize its endeavor of contributing to the                                                                                                                          Assitant Manager
Nepali economy in every way possible. MEX Nepal will always                                                                                                                                      Research and
uphold the expectations of its valuable traders and will justify the                                                                                                                             Development
same with all its hard work and efficient work-style. Progressions                                                                                                                               Department
are always led by dreams and MEX Nepal dreams the best way!

MEX EXPRESS                      - Jitesh Surendran                                                       Page 01
                                    CEO, MEX Nepal

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