Prerequisites

1. Exchange trading grain market shall be organized within the framework of existing Commodity Section "Grain, Leguminous and Industrial Crops" of National Mercantile Exchange (NAMEX). NAMEX has the License, issued by Commission for Commodity Exchanges of MAP of Russia No. 129, dated September 26, 2002, on organization of exchange trading in the sections of "Grain, Leguminous and Industrial Crops", and "Standard Contracts (Traded Instruments)».
2. Exchange trading grain market shall be organized on the basis of infrastructure and trading technologies of Moscow Interbank Currency Exchange (MICEX) and NAMEX.
3. Trading sessions shall be conducted at all Trading Places, which have concluded Representation Agreements with NAMEX, as well as via remote access points.
4. Participants of Trading Sessions (hereinafter referred to as Traders) shall be NAMEX Members, NAMEX Regular Visitors and their Clients.
5. Basic traded asset shall be grain, delivered against Supply Contracts, concluded between Traders by results of trading sessions.
6. Traders' liabilities for concluding and executing Supply Contracts, as well as for paying trading fee, shall be guaranteed by Security Deposit.
7. Supervision over fulfillment of Traders' liabilities shall be performed by Supply Controller, which is an Authorized Government Agent.
8. Traders shall be allowed to participate in trading sessions after allocation of their Security Deposit to NAMEX bank account.
9. During trading session Trader shall operate within a limit, established with respect to its Security Deposit.
10. Trading sessions shall be conducted in the format of digital two-way auction with Traders making buying and selling bids in Grain Trading System (GTS).
11. Traders' bids shall be introduced into GTS via Authorized Representatives of NAMEX Members/Regular Visitors (private individuals, accredited at NAMEX as brokers).
12. The pricing on exchange trading grain market shall be free — deals shall be concluded in GTS via continuous correlation of buying and selling bids.
13. By making its bid in GTS, the Trader confirms its irrevocable consent to conclude a Supply Contract on terms, specified in the bid, and within the limit of grain quantity, specified in the bid.
14. Deals can be also concluded via mutual bilateral consent of the Traders (off-system deals).
15. The Trader shall pay a trading fee to NAMEX for each concluded deal.
16. Results of trading sessions are formalized by Traders, concluding Supply Contracts against their closed deals, provided such Contracts are signed by Contracting Parties and Supply Controller.
17. Grain deliveries shall be made in accordance with Supply Contracts.
18. Grain deliveries shall be made to Authorized Elevators, which are selected as grain storage sites by Authorized Government Agent.
19. In case the Trader refuses to sign Supply Contract or fails to fulfill its liabilities under Supply Contract, its Security Deposit minus trading fee shall be paid to the damaged party.
20. When the Trader fulfils its liabilities under Supply Contract, its Security Deposit minus trading fee, which has been blocked after closing of a corresponding deal in GTS, shall be released and returned to the Trader.

Infrastructure Organizational Elements

Key infrastructure organizational elements are the following companies and agencies:

• An Authorized Government Agent — Supply Controller;
• NAMEX — Organizer of all trading sessions and account settlements (Trading Administrator);
• MICEX — Technical Center with its computerized integrated system used for trading session support and for granting access for Traders to trading session via Internet technologies, via remote access points and via Trading Places;
• Regional Trading Places, acting as NAMEX representatives during trading sessions when providing access to Traders from other regions:
  • Saint-Petersburg Currency Exchange (St.Petersburg),
  • Samara Currency Interbank Exchange (Samara),
  • Rostov Currency and Stock Exchange (Rostov-on Don),
  • Urals Regional Currency Exchange (Yekaterinburg),
  • Siberian Interbank Currency Exchange (Novosibirsk),
  • Asian-Pacific Interbank Currency Exchange (Vladivostok).
• Authorized Elevators — specialized grain-storage companies, selected by Authorized Government Agent.

Organizer of Exchange Trading Sessions

Organizer of exchange trading sessions shall be NAMEX.
NAMEX shall be responsible for:

• organization and administration of trading sessions;
• granting access for Traders to trading sessions;
• receipt of Security Deposits, which guarantee fulfillment of Traders' liabilities;
• clearing and settlement of accounts by results of trading sessions.

Authorized Government Agent

Authorized Government Agent shall be responsible for:

• approval of requirements to Traders for granting access to trading sessions;
• harmonization and approval of specifications for traded instruments;
• functioning as Supply Controller.

Supply Controller

Supply Controller shall be responsible for:

• selection of authorized elevators for grain-storage;
• supervision of liabilities fulfillment by Traders;
• notifying NAMEX on fulfillment or failure to fulfill Supply Contract liabilities by Traders.

Authorized Elevators

Authorized Elevators are companies, specializing in grain-storage, selected by Authorized Government Agent.
Authorized Elevators shall be responsible for:

• storing grain against Supply Contracts, concluded at NAMEX trading sessions;
• providing assistance to Authorized Government Agents, when the latter perform their Controller functions during grain receipt and delivery against Supply Contracts.

Organization of Security Deposit System

Collateral system, which guarantees fulfillment of liabilities by Traders, shall include:

• payment of Security Deposit for fulfillment of Trader's liability into NAMEX bank account. In case the party fails to fulfill its liabilities, its Security Deposit shall be paid to the damaged party;
• cash bank transfer for complete value of grain by the buyer into account of the Authorized Government Agent at Authorized Clearing Center. After grain delivery to the buyer and conclusion of Delivery and Receipt Act the buyer's money shall be transferred to the Seller by Authorized Government Agent.

Market Players (Traders)

The following parties can participate in trading sessions as traders:

• NAMEX Members,
• NAMEX Regular Visitors,
• Clients of NAMEX Members/Regular Visitors.

The Trader shall conclude deals during trading sessions via a broker — and individual, accredited at NAMEX as a broker and authorized by the Trader to conclude deals on its behalf.
Brokerage Houses, which provide services for Clients, can be NAMEX Members/Regular Visitors. Participation in trading sessions on the real commodity market does not require any licenses of exchange broker or intermediary.
The following parties can act as Traders:

• Grain producers (collective farms, farmers);
• Wholesale buyers and sellers;
• Companies, which credit commodity deals (such as oil companies, machine-building enterprises, etc.);
• Grain-storage companies (elevators and granaries);
• Companies of flour-and-cereals industry;
• Non-specialized organizations: leasing companies, other private individuals and legal entities.

Trading Procedure

1. All deals with basic assets shall be concluded in digital format in GTS via Traders' bidding.
2. By making a bid in GTS, the Trader confirms its irrevocable consent to conclude deal on terms, specified in the bid, and in accordance with deal-execution rules, stipulated in Trading Regulations and Traded Instrument Specification.
3. Traders can revoke their bids, which stand in a bidding queue, as well as change their parameters/features.
4. Bid features/parameters include the following:
   • Type of basic asset;
   • Bid direction (bid for buying or selling);
   • Quantity of basic asset;
   • Price.
5. Changing of bid parameters/ features means cancellation of the bid and introduction of a new bid into the system with changed parameters.
6. Trader shall bid within the quantity of basic assets, collateral to the sum of invested Security Deposit. If the bid does not satisfy these requirements, GTS automatically blocks access of this bid to a trading session.
7. The deal shall be concluded by the price of the best cross-counter bid.