Everything about the commodity and raw materials exchange: what they trade on them + list of the largest

The term “commodity exchanges” refers to continuously operating platforms that specialize in large-scale wholesale transactions for the purchase and sale of goods. The activities of the market are controlled by a set of laws. The state of affairs on the exchanges determines the market value of basic consumer products. Taking into account the presented catalog, specialized and universal sites are distinguished.

What kind of exchange is this and why is it needed?

Commodity exchanges (TCBs) are specialized platforms where various commodities and instruments and their derivatives are traded.
Products are considered to be varieties of raw materials, minerals, and food products. The most liquid assets are oil, precious metals, grains, sugar, dairy products, pork, beef, corn and coffee.

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Here, the parties can enter into fixed-term (within a certain period of time under certain conditions) contracts. Derivatives can be delivered or settled.

Financial risks

On any exchange where speculative trading occurs, there are always risks. This is due to the fact that it is impossible to say and predict with one hundred percent certainty when and where exactly market quotes will move, that is, go up or, conversely, go down. For a speculator, an accurately compiled forecast is a guarantee of his earnings. If the trader’s analytics are correct, only then will he be able to make money.

Every financial transaction that takes place on the stock exchange is insured by a speculator using a special instrument, a protective stop-loss order. In the event that the forecast in the direction of market movement is made incorrectly, then, having reached a certain level specified in the parameters of the protective order placed by the speculator, the exchange transaction will be closed automatically and the loss on it will stop. Of course, the trader will lose some of his funds, but the main amount of his balance will remain. Therefore, professionals advise all beginners to trade with financial risks of no more than 2% of the deposit.

Classes of goods on the exchange

Trading on TSB:

• industrial raw materials and semi-finished products;
• forestry and agricultural products, the results of their processing.

Industrial raw materials and semi-finished products

By the end of the last century, crude oil and petroleum products became the most popular energy carriers. The unit of account for oil is the barrel (approximately 159 liters).

The price of oil is a determining factor in the success of national trade for many countries around the world. Petroleum products include motor gasoline, fuel oil, aviation kerosene, and diesel fuel.

Agricultural and forestry products, as well as their processed products

Currently, the volume of transactions in agricultural products is gradually declining. This is associated with the widespread introduction of synthetic analogues of raw materials.

For example, artificial textiles are several times cheaper than natural ones, as a result of which the liquidity of the asset decreases. However, the demand for meat, dairy and food products remains high and (most likely) will only grow.

List of exchanges in Russia

There are 2 popular TSBs in the Russian Federation - Moscow and St. Petersburg.

The Moscow Exchange received its current structure in 2011 as a result of the merger of the MICEX and the RTS. On the Moscow Commodity and Raw Materials Exchange, precious metals, fuel and grains are among the popular assets.

Official website of the exchange: https://moex.com.

The largest Russian commodity and raw materials exchange

Russia's largest commodity and raw materials platform is located in St. Petersburg. The foundations of the PJSC were laid back under Peter, and today it is the center of trade in fuels and lubricants, agricultural products and forest products.

In addition to direct transactions, market participants have the opportunity to enter into futures contracts (except for options). In total, more than 1,700 types of assets are represented.

Official website of St. Petersburg TSB: https://spimex.com

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List of exchanges in the CIS

In the states of the former union, commodity exchanges are based:

• in Ukraine (UTSB, https://utsb.kiev.ua);
• in Belarus (BUTB, https://bytb.by);
• in Uzbekistan (UzRTSB, https://uzex.uz);
• in Turkmenistan (GTSBT, https://exchange.gov.tm).

All of the trading platforms mentioned above offer mainly energy resources (crude oil, gas, fuel oil, coal, firewood, diesel fuel), metals, food products, agricultural products, and the opportunity to trade derivatives on such assets.

Purchase and sale of petroleum products and fuels and lubricants

On the exchanges of petroleum products and fuels and lubricants, the following is purchased and sold:

• Various types of petroleum products - since 2008.
• Futures for petroleum products - since 2010.
• Crude oil – since 2013.
• Gaza and forests - since 2014.

Buying and selling other goods is also available. It is worth noting that in 2014 alone, more than 17 million tons of petroleum products, as well as goods that were created on the basis of gas and oil, were sold on the exchange. SPIMEX calculates price indices of the domestic petroleum products market based on indicators of over-the-counter contracts, as well as exchange contracts. For futures contracts on the derivatives market, SPIMEX has been the underlying asset for four years.

Largest international commodity exchanges

1. CME Group (https://cmegroup.com). The largest commodity market, geographically located in Chicago. There are many products and derivatives available here. Liquid assets are precious metals and grains. as a result of the merger of the commodity exchange with the CBOT chamber of commerce from Chicago, New York NYMEX (the leader in the volume of trading in oil futures). CME attracts commodity market participants with a wide variety of futures contracts and options. For example, in 2022 it became the first official platform to add cryptocurrency futures to the listing.
2. LIFFE (https://derivatives.euronext.com) is one of the largest TSBs in the European Union (located in London). The most liquid assets are food products. The LME Metals Exchange, a leader in non-ferrous metals trading, is also located here.
3. The largest Asian platform is the Tokyo Commodity Exchange, otherwise TCE (https://tocom.or.jp). This commodity exchange accounts for up to 90% of the trading volume in commodity derivatives. Among the most liquid assets, it is worth highlighting oil and precious metals.

History of origin

The commodity exchange is considered a product of the evolution of market relations in society. The very first type of wholesale sales includes caravans. They went irregularly, there was no exact meeting place, and there were no established rules. In the Middle Ages they were replaced by fairs, which were held regularly; citizens were informed of the date and location of the auction.

Research by historians indicates that in the XII-XIII centuries. commercial transactions with deferred payment have already taken place on annual trading platforms. During the same period, rules were created regarding the qualitative characteristics of goods and the regulation of trading activities.

The first commodity exchange in the world was organized in 1409 in the city of Bruges, the economic center of Northwestern Europe. There is a version that the type of trade got its name thanks to the square “de burse” or “de exchange” in the local dialect. Here was the office of a large broker who provided shelter to merchants, and perhaps he gave the name to this form of trade.

The first regulated commodity exchange was formed in 1460 in Antwerp, and a full-fledged building for trading was built in 1530.

However, due to the attack on the Spanish settlement, the authorities decided to move the commercial center to Amsterdam.

After 20-30 years, commodity exchanges began to open in other European trading centers - London, Amsterdam, Lyon, Berlin, etc. In Russia, a trading platform arose in 1703, after Peter the Great visited Holland.

During the socialist regime, auctions ceased to function throughout the Soviet Union and resumed only after the transition to a market economy. The oldest stock exchange in the United States, the New York Stock Exchange, opened only in the 19th century.

How to gain access to commodity exchanges

To gain access to trading on the TSB, you must find a licensed broker and enter into a brokerage service agreement:

1. For those who are planning to trade on domestic platforms, Russian brokers are suitable - commissions are low, technical support is in Russian.
2. To trade on foreign exchanges, it is better to turn to foreign brokers - in this case, clients need reliability.

Verified foreign brokers

Warning about Forex and binary options

Expert opinion

Vladimir Silchenko

Private investor, stock market expert and author of the Capitalist blog

Ask a Question

In the article I mentioned the word “option”. Perhaps readers thought that I meant binary options (BO), which are so advertised on the Internet. I want to warn you that this is not true. Only real options are traded on TSB, which have a completely different operating principle.

A binary option is simply a bet on a quote on the market, and the problem is that the company offering BO sets the quotes itself. It is easy to guess that the results of such bets will not be in favor of the client.

The situation is similar with Forex. The market itself is unregulated, with a turnover of trillions of dollars. Accordingly, individuals have nothing to do there. However, there are a lot of companies offering access to Forex, but they don’t give any access, but organize a so-called Forex kitchen, where all the quotes are fake.

The conclusion is not difficult to draw: Forex and BO are a scam. I hope readers will heed my warning.

Transaction participants

Everyone who takes part in the auction can be divided into 3 large groups:

• intermediaries;
• traders;
• organizers.

A broker is an intermediary who concludes purchase/sale transactions and receives payment in the form of a commission. A dealer is a specialist who makes transactions on his own behalf. The broker, in turn, makes purchases or sales in the market for himself.

The second large category of participants is traders. They trade only on their own behalf and are speculators.

At this exchange there are also people who perform ordinary tasks, for example, a clerk and an operator who helps the broker conclude a deal.