MICEX: Grain Market Players Urge The Government To Improve State Regulation Of The Grain Market

A round-table discussion, devoted to the prospects of the organized grain market, has been held in Moscow. The event was organized by the participants of the grain market with the support of the MICEX. The discussion focused on the organizing of permanent exchange trading in grain on the all-Russia scale.

The discussion was attended by Alexei Gordeyev, the RF Minister of agriculture and Deputy Chairman of the RF Government, representatives of the RF Ministry of Agriculture, the RF Finance ministry, the RF Antimonopoly ministry, the Russian Grain Association, the MICEX, the National Commodity Exchange, regional exchanges as well as participants of the grain market from different regions of Russia.

Opening the round table discussion, Mr. A.Gordeyev noted that state procurements, which have been lately made on the basis of exchanges, create the necessary prerequisites for the organization of a permanent exchange market of grain.

Participants of the round table discussed the current state, problems and mechanisms of the regulation of the domestic grain market. In particular, the MICEX CEO Alexander Potemkin presented an idea of organizing an all-Russia exchange market of grain on the basis of the infrastructure formed as a result of state procurements.

Participants of the round table discussion adopted a resolution, which states that "the securing of sustainable development of the RF grain industry requires the immediate formation of such elements of the organized market as exchange trading and the system of circulation of warehouse certificates and the improvement of state regulation. The mechanisms of state regulation of the grain market must be transparent and predictable and must use modern market institutes."

The resolution urges the RF Government:

to make decisions in the shortest possible time on the improvement of the mechanism of state procurements and commodity interventions in the grain market. These decisions must envisage the use of exchange trading and giving interventions automatic character;
to emphasize the priority of exchange trading as a mechanism of procuring agriculture products and food for state needs;.

Besides, participants of the round table discussion offered the RF Federal Assembly:

to finalize in 2004 the draft Federal Law "On simple and double warehouse certificates" and discuss it at its plenary meetings;
to make necessary amendments to the existing legislation, considering proposals on the improvement of the mechanisms of state regulation of the grain market.

The discussion demonstrated the interest of agricultural producers and processors to the organization of an open exchange market of grain.

Background

In 2002-2003, state procurements were based on exchange trading, conducted to regulate the grain market on the basis of the infrastructure of the Moscow Interbank Currency Exchange (MICEX) with the assistance of the National Commodity Exchange. In the course of trading agricultural producers entered orders into the electronic trading system, which covers all main grain producing regions of Russia. The access of regional participants was provided by the St.Petersburg Currency Exchange, the Rostov Currency and Stock Exchange, the Nizhni Novgorod Currency and Stock Exchange, the Samara Interbank Currency Exchange, the Urals Regional Currency Exchange and the Siberian Interbank Currency Exchange. Trading involved 343 participants from different regions of Russia. According to the RF Ministry of Agriculture, the interventions helped to stabilize domestic grain prices.