JSC Commodity Exchange ‘‘Caspian’’ Emissions Trading at JSC Commodity Exchange “Caspian”

JSCCommodity Exchange ‘‘Caspian’’

Emissions Trading at JSC Commodity Exchange “Caspian”

JSC Commodity Exchange “Caspian” (further JSC “TBC”) is registered as the legal entity on November 18, 2011On December 30, 2011 JSC “TBC” obtained the state license No. 1000349 for the implementation of commodity exchangeThe first biddings on an exchange platform took place on December 30, 2011 at once after receipt of the license on agricultural products section.In January 2012, we launched an online electronic trading system and began regular trading on the section of industrial and consumer goods, agricultural products, oil and petroleum products, metals and metal products.Presently the organized commodity market becomes more and more demanded attribute in system of the market relations of domestic enterprises.Main objective of the exchange is forming of the organized commodity market providing concentration in one place of the demand and supply, and also establishment of the clear and transparent mechanism of forming of fair prices for basic commodities. The correctly organized commodity exchange building a system of guarantees of execution of transactions and helps to improve the liquidity of the commodity market, and hence the popularity of organized trade through the exchange infrastructure.From the moment of the basis of JSC “TBC” cooperates with commodity exchanges of CIS countries and foreign countries, the Kazakhstan and foreign banks, the Ministry of economic development and trade of the Republic of Kazakhstan, and also is official member of the Interexchange electronic union of the countries of EurAsEC.Our brokerage companies have the certified accreditation, and the personnel of the Exchange was trained concerning the organization of commodity exchange trading on leading exchange platforms of the worldToday JSC “TBC” conducts the biddings on the principles of publicity and equality. The agreements signed at the exchange are not subject to notarial certification, and are obligatory for accomplishment by their parties in case of internal and external economic relations. Clients of the Exchange use various services of JSC “TBC”: informational, advisory and etc.JSC “TBC” takes active part in reforming of national economy, development of international economic relations, and also formation of the market relations.Computer support of the bidding process, skilled specialists, standardization of conditions and exact accomplishment of rules erects to a minimum of loss of time for the conclusion of agreements.

JSC Commodity Exchange “Caspian”

About JSC “TBC”


The system of trading and clearing

Clearing

Client

Member of Clearing House

Member of Clearing House

Clearing

Exchange

Head of exchange

Client

The clearing exchange center


Structure of elements and control

Supervisorycouncil

Market research

Council of the exchange

• Shareholders

The exchange Arbitration

Exchange management

Reporting

ManagementCurrent work

Private law

Public law

• represents members of trade

•Permanent control

The Commission onsanctions

• The current work at the exchange


State control and cooperation.

Council of the exchange www.tbc.kz

Council of the exchange www.tbc.kz

The International Arbitration Court "IUS" www.iusea.com

The International Arbitration Court "IUS" www.iusea.com

JSC “Zhasyl Damu” www.zhasyldamu.kz

JSC “Zhasyl Damu” www.zhasyldamu.kz

The ecological code of Republic of Kazakhstan (Head – 9-1); The Order of the Government Republic of Kazakhstan of December 13, 2012 No. 1588 "About approval of the National plan of distribution of quotas of emissions of greenhouse gases for 2013"; The Order of the Minister of May 11, 2012 No. 151-p "Rules of trade in quotas of emissions of greenhouse gases and carbon units";

Exchange trading rules from 10.08.2012, theTerms of trade quotas on greenhouse gas emissions and carbon credits from 01.08.2013.

Law of Republic of Kazakhstan of 28.12.2004 N 22-3 "On arbitration courts"Rules of the International Arbitration Court «IUS»

Committee of trade of Department of Economic Affairs and budgetary planning

of the Republic of Kazakhstan www.comtorg.kz

Committee of trade of Department of Economic Affairs and budgetary planning

of the Republic of Kazakhstan www.comtorg.kz

The Law of the Republic of Kazakhstan "On Commodity Exchanges" from 03.07.2013Resolution of the Government of the Republic of Kazakhstan on December 28, 2012 № 1707Resolution of the Government of the Republic of Kazakhstan on December 20, 2012 № 1644Resolution of the Government of the Republic of Kazakhstan on December 21, 2012 № 1653Resolution of the Government of the Republic of Kazakhstan on December 6, 2012 № 1552


The contractual framework of control

Terms and Conditions

Clearing member

Terms of non-clearing

members

Clearing agreement

• Exchange trading rules• Terms of trading• Code of Conduct• conditions of a contract• tariffs

• clearing conditions

Exchange The clearing exchange center

Terms of clearing membersof non-

clearing participant

=trader

Agreement on the exchange

Transport System Operator

trade agreement

Registration


Activization of all groups of participants

Hedged bidders

Hedging with futures(for example, with respect to volatile spot prices of quota)

Hedging with provision of possibility of participation in favorable development of the prices on condition of an award.

Arbitrage trading participants

Strategy of trade in case of which in proportion incorrectly estimated tools for receipt of risk-free profitability are used.

Time arbitrage: In case of time arbitrage the line item which is liquidated again by means of simultaneous transactions with derivative financial instruments, opens in certain time.

Third bidder

The contract is bought / sold in anticipation of changes in market prices in order to eliminate later with the benefit of the final position. Third bidders take a risk and provide liquidity support to other bidders with different views on the market..


Offers urgent and trade spot

Spot market Derivatives market

Market structure

Today: =< 2 days > 2 days

Biddings delivery

payment Biddings delivery

payment

The market of deliveries according to transactions for term

Annual market of deliveries


Standardization of all processes• Standardized terms of the Contract:• The set quantity and quality,• Place of delivery period / delivery date,• If necessary, the type of product,• Terms of payment• Speed of / size and scope of the contract,• The asking price, the type of the option and the exercise price

• Standardized bidding procedures :• Trading hours• Pricing• Reconciliation

• A standardized clearing and settlement:• Providing liabilities, daily calculations, final settlements, consecutive arrangement of

contracts (if necessary), delivery, payment of option premiums, option implementation, concession, mutual settlement of requirements and contract obligations

Participants shall agree only about the price and number of contracts


Portfolio of products for the bidder

Primary implementation

Derivatives market

Secondary implementation

Spot market

Rights to CO2 emissionThe contract on a basisnational plan.Spot auction based on KZQ

Derivatives market

Rights to CO2 emissionAuctions KZQAuctions of derivatives KZQ Futures KZQ

Rights to CO2 emissionAuctions KZQAuctions of derivatives KZQ

Completely integrated clearing and cross-margining through commodity exchange “Caspian”

EEXEEXTrade participant

buyer

Trade participant

sellerClearing member

Report of JSC “Zhasyl Damu”list of quotas

Report of JSC “Zhasyl Damu”list of quotas

Clearing centre of ExchangeClearing centre of Exchange

CO2 certificate

CO2 certificate

4 CO2 certificate

CO2 certificate

1

Money3

Money3

CO2 certificates

3

Buyer reportBuyer report

Internal reportBuyer

Internal reportSeller

Seller reportSeller report

Order2

Order2

Clearing member

Clearing memberJSC Commodity Exchange

“Caspian”

Clearing member

Clearing member


Cooperation with departments on registration


Effective risk management system

• The Clearing House (KCB) assumes counter-party risk according to all transactions.

• For the purpose of ensuring accomplishment of all transactions in case of insolvency of KCB requires providing liabilities, a so-called margin.

• Calculations are conducted on the basis of world-wide acknowledged methods.

• KCB accepts securities or cash in quality providing liabilities.

• Providing liabilities of KCB is encumbered with pledge with parties of the member of clearing.

• Providing liabilities of the member of clearing are encumbered with pledge at least the same size from outside member of the transaction. Members of the biddings can make recalculation

KCB

Participant of margin trading

Member of a clearing margin

Clearing fund

Trade participant

Clearing member

Clearing center of exchange


Effective trading and back office systems

System settlement

Spothandels-systeme

Spothandels-systemeTrader

Spothandels-systeme

Spothandels-systeme

Clearing member

Exchange

System of Derivative trading

Reports / Interfaces

Clearing system

Real delivery

Internal back office / Cost accounting / Risk management system

Internal system of conducting financial accounting

Reports / Interfaces

System of spot trading


Flexible technical connections

•MISS = System server of members of integration

Internet AccessInternet connection

Joint access Connection through the allocated

line and Internet

Premium AccessConnection through

2 allocated lines

Exchange database

Web Access

The 2nd connection with other provider (in case of opportunity)

Access pointAccess point Access point

Reserve *MISS

Internet

*MISS-group

*MISS /LAN

terminal

Router

Router

Internet

*MISS-group

*MISS /LAN

terminal

Router

Router

*MISS-group

Reserve *MISSTra

der

Exc

han

ge

Internet

Terminals with connection the Internet and a

token

Reserve *MISS


010000, Аstana, Kazakhstan, Business Centre “Caspian” Taha Hussein street, 9

www.tbc.kzfax : +7 7172 570 080tel.: +7 7172 571 002E-mail: [email protected]

http://www.tbc.kz/

JSC Commodity Exchange ‘‘Caspian’’ Emissions Trading at JSC Commodity Exchange “Caspian”

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