Wealth Exchange educational supports our objective to educate people about online trading, analysing market research & movements using various available tools and research papers. Wealth Exchange has also joined hands with KFA to provide such trainings and courses.
Wealth Exchange also promotes educational projects and research works that advances financial market literacy. WEX also supports scientific research that enhances the prosperity of commodity market in Nepal.
Wealth Exchange on a regularly basis conducts training programs by itself to new comers, interested Clients and experts and shares individual experiences to develop further solutions based on their requirements.
Margin is a good faith deposit or performance bond to guarantee the performance of obligations under a futures contract. Margin is required to be deposited by a customer with his broker, or deposited by a broker with a clearing member, or by a clearing member with the clearing house.
Initial margin is the minimum margin requirement to open a futures position. Maintenance margin is the minimum equity that must be maintained in a customer’s account subsequent to deposit of the initial margin. If the equity balance drops below this level, a deposit must be made to bring the account back to the initial margin level. For this purpose, a margin call is issued to the customer by the broker. In some circumstances where there are considerable market volatilities, an intra-day margin call may be issued to take account of the intra-day futures price movements to a customer’s positions.
Margin may be in the form of cash or non-cash collateral as determined by the exchange and clearing house.
Once a trade is matched on the exchange, the clearing house will act as the counterparty to each side of the transaction, assuming the counterparty risk involved when two parties (or members) trade. This central counterparty function minimizes counterparty risks to clearing members and market participants.
As the natural buyers and sellers of commodities products, commercial users are the ultimate drivers of commodities volumes. The trading of commodities and associated futures and options contracts are fundamental to the business operations of the commercial users. These groups may connect directly to an exchange but often execute transactions through agents such as investment banks or futures brokers. Commercial users also are continuously subject to risk, as they are unable to produce their core products without commodities. Refineries are wholly dependent on the price and delivery of crude oil or fuel oil to produce petroleum products such as gasoline and diesel fuel. Airlines rely on jet fuel to operate, while shipping firms depend on bunker fuel. In addition, manufacturers such as technology companies often rely on a range of commodities including precious and semi-precious metals.
Professional traders represent a broad range of asset managers including institutional investors, pension funds, university endowments, hedge funds and algorithmic traders. These asset managers employ a broad range of trading strategies in the commodities and futures markets to earn investment returns. Professional traders represent significant assets under management and are a major source of liquidity.
The swaps desks of investment banks use commodity prices to create structured products such as commodity swaps that are in turn marketed to commodity users and producers. Since most swaps are traded OTC, swaps traders have a natural demand to hedge OTC swaps using futures contracts traded on an exchange. Wealth Exchange will establish benchmark commodities pricing in Nepal which in turn will drive hedging demand in the swaps market.
Arbitrage traders seek to identify price dislocations between multiple markets. Arbitrageurs will be attracted to execute transactions on Wealth Exchange because of the price discovery of significant commodities throughout Nepal.
High Net Worth Individuals
High net worth individuals have significant investable assets and are generally clients of private banks and investment banks.
|CONTRACT DESIGN OF PRODUCTS
A well-planned contract will increase the liquidity of the commodity, particularly in the context when contracts currently available to market participants do not adequately address users’ risk exposures. Wealth Exchange will introduce tailor-made contracts catering to end user demand that will enable traders, investors and industry players to hedge commodities price risks in a fair and transparent manner. Key to this is the product development process. Product Development is conducted in five phases: Concept Generation, Analysis, Development, Marketing and Post-Implementation Product Feedback.
Product Concept Generation
Deep understanding of both commodities market trends and the needs of trading members is key to identifying new products. The Product Development division is responsible for conducting detailed market analysis and collaborates with leading industry experts to identify potentially underserved markets. The product team will continuously review the performance of existing products to analyze their strengths and weaknesses. To improve liquidity and volumes, we will perform extensive independent research and seek feedback from trading members to introduce or modify product features to enhance the attractiveness and liquidity of Wealth Exchange contracts. This approach is critical, as some of the world’s most liquid products require multiple iterations before becoming global benchmark contracts.
To determine the viability and market potential of a new product, Product Development team reviews several key factors. These factors include the particular commodity demand in the region, the existence and vitality of a spot/cash market and the existence and vitality of an OTC market. In general, gaps in any of the factors above may present a market opportunity. The product development team critically analyzes the overall market size, current and expected competition, demand level from members, key specifications, delivery points as required and projected revenue opportunity to determine the viability of any potential product.
Once a product is determined to be attractive for launch, the Product Development team produces a detailed timetable for development which highlights the key milestones required to launch a new product. Product specifications are developed with end users in mind and require input from a focus group of key members who would likely be the most active traders of the new product.
The completion of a product design is the beginning of its appearance to the market. The Marketing team will begin to promote the new product . These activities include, among others, face-to-face meetings with the financial community who will participate in the trading of this product; roadshows to introduce this product to different target audiences; meeting with major industry players to gauge their buy-in; education tutorials and media activities to increase the exposure of this product to the financial community and public.
Post-Implementation Product Feedback
The Product Development team will gather feedback from users on the contract specifications and trading & delivery features, internal feedback via MIS and regulator reports and monitor market indicators through trading volume, open interest and so on. This information will help the Exchange to further polish its product offerings and services.