Management of Exchange is liable to set a strong chain to regulate its affiliates as Member or client. Exchange has to make safeguard of amount of participants. Trading management, Member management, formation of market safeguard are essentials.
Main focus has to be in market safeguard, which is as mentioned here:
i) The Clearing House Department
In protecting the financial integrity of the marketplace, MEX together with its own Clearing House department adopts a financial and operational safeguard system that is comparable to the best international practices. This system is designed to provide the highest level of safety with very early detection of unsound practices on the part of any Member. Protection against market defaults is imperative and remains the ultimate goal of the clearing system.
ii) The Audit, Compliance & Surveillance (ACS)
The ACS has the overall responsibility of upholding the integrity of MEX futures markets. The division carries out a wide range of duties through its carefully selected and competent audit division which include daily and regular monitoring of the market and Members, regular visits to Members' offices for field inspection, audits and monitoring of the activities on the trading.
The duties of the ACS can be classified into the following major areas:
- Audit and Compliance
Responsible for detecting violations of the Rules and the Bye-Laws, Conducts routine and surprise inspections, audits on Member, as well as reviewing the adequacy of their internal controls.
- Financial Surveillance
Responsible for detection of any failure by Members to meet the minimum financial requirements of the Exchange. Conducts regular monitoring of Members' financial positions and clients' funds in segregation. Submission of Periodic net-worth to MEX, maintenance of minimum capital level in member deposit accounts, regular inspection of member's office and their documentation, periodic compliance report submission by members are the necessarily followed by exchange to ensure financial capabilities of the members. Early warning levels are established to facilitate more intensive monitoring where necessary, on the Members' financial positions.
- Market Surveillance
Responsible for detection of any adverse situation that may threaten the orderly trading or liquidation of contracts on any MEX futures markets to avoid possible market disruptions. Conducts daily monitoring of the futures prices and prices of the underlying commodity in markets, and the prices of substitutes of the underlying commodity of the futures contracts, as well as the open positions of traders.
iii) Segregation of Clients' Funds
Members are required to maintain a separate bank account for all clients' funds. Clients' funds cannot be withdrawn from the segregated account unless client is not submitting the withdrawal slip through his/her members. To ensure the client money safety exchange is ensuring signature and thumb print on withdrawal slip to avoid any such of fraud-ness. Members are also not permitted to use monies belonging to one client for margining or financing the trades and positions of another client or the Member itself.
vi) Exchange Management:
Mercantile Exchange Nepal Ltd (MEX) is incorporated as a Public Limited Company organized under Laws of Nepal During August 2007 with an authorized share capital of 100 Million NPR (equivalent to 1.4 Million USD) and a paid up capital as on 31st March 2009 is 25 Million NPR (equivalent to 340,000 USD). The company is governed by Board of Directors, comprising 7 members with 1 independent director as full time directors. M/s N.K Joshi and Co, a leading auditors firm functions as the statutory auditors of the firm and M/s B & B Associates acts as fulltime concurrent auditors. The B.O.D comprises of professionals in the field of finance and industry and who are also dominant promoters & shareholders of the company. The Managing Director works as a full time Director representing the Board in the day-to-day activities, while CEO of the Exchange is dedicated in running the business, reporting to the Board of Directors. Both the MD and CEO have about 10 years experience in the futures market. Professionals are our back bone, Transparency is our day-to-day practice. Technology is our stem. Commercialization of market is our goal. Reducing of risk is our motto.
Board of Directors
- Mr. Bal Krishna Upadhyaya.
- Mr. Narendra Bahadur Thapa
- Mr. Dipendra Khatiwada
- Mr. Madhav Prasad koirala.
Chief Executive Officer/ Management Consultant:
To implement effective governance, to improve services and to be more dedicated on our objectives MEX formed an advisory committee, which provides necessary advises to dedicate ourselves in our objectives: Formation of advisory committee shall be a team of eminent person of their field, who has long and valuable contribution to domestic economy and market development.
- Member Services Committee.
- Surveillance Committee.
- Trading, Clearing and settlement committee.
- Disciplinary committee.