Trad­ing Over­seas

Over seven years the Be­laru­sian Univer­sal Com­mod­ity Ex­change has gone a long way from sim­ple voice-fa­cil­i­tated trade ses­sions to dig­i­tal auc­tions ac­ces­si­ble from all over the world

Economy of Belarus - - CONTENTS - Arkady SALIKOV

Over seven years the Be­laru­sian Univer­sal Com­mod­ity

Ex­change has gone a long way from sim­ple voice-fa­cil­i­tated trade ses­sions to dig­i­tal auc­tions ac­ces­si­ble

from all over the world

Steps of the Way

In point of fact the com­mod­ity ex­change started work­ing in mid2005 when reg­u­lar trade in tim­ber and me­tal prod­ucts be­gan (the first trad­ing ses­sion to sell tim­ber took place on 2 June 2005, me­tal prod­ucts on 29 June 2005). In Q4 2005 the com­mod­ity ex­change started pre­par­ing for sell­ing agri­cul­tural prod­ucts and launched ac­tual sales in Jan­uary 2006.

It should be noted that ini­tially the com­mod­ity ex­change per­for­mance was poor largely due to the lack of un­der­stand­ing of the com­pany’s role among reg­u­lar trade par­tic­i­pants and high-rank­ing of­fi­cials. Be­sides, at the start the com­pany had no prac­ti­cal ex­pe­ri­ence of as­sim­i­lat­ing ex­change tech­nolo­gies.

Now the sit­u­a­tion has dras­ti­cally changed. The num­ber of those op­pos­ing the idea re­duced sharply while the stel­lar per­for­mance con­vinc­ingly demon­strates the choice was right. Bil­lions of rubles were saved (for­eign cur­rency in many cases) by Be­laru­sian sellers and buy­ers thanks to the com­mod­ity ex­change.

Over the seven years (which is quite a short pe­riod of time be­cause some in­ter­na­tional ex­changes have been in ex­is­tence for over a hun­dred years) a lot has been done. BUCE

A com­mod­ity ex­change in the struc­ture of trade and eco­nomic ties of any coun­try helps im­prove trade ef­fec­tive­ness and re­duce the shady part in whole­sale trade. Many post-soviet re­publics have used com­mod­ity ex­changes to es­tab­lish trans­par­ent eco­nomic re­la­tions, in par­tic­u­lar, Rus­sia, Turk­menistan, Kaza­khstan, Ukraine, and Uzbek­istan. Be­larus was no ex­cep­tion. The Be­laru­sian Univer­sal Com­mod­ity Ex­change (BUCE) was cre­ated fol­low­ing the ini­tia­tive of the head of state by Coun­cil of Min­is­ters’ Res­o­lu­tion No. 1719 of 30 De­cem­ber 2003. The state owns 98% in the com­pany.

made the tran­si­tion from con­ven­tional voice-fa­cil­i­tated trad­ing ses­sions to dig­i­tal auc­tions that use the lat­est in­for­ma­tion tech­nolo­gies, mod­ern soft­ware, com­put­ers, and com­mu­ni­ca­tion equip­ment, al­low­ing sellers and buy­ers to make trans­ac­tions in any part of the globe.

The le­gal base that reg­u­lates the com­mod­ity ex­change mar­ket has been con­sid­er­ably im­proved: sev­eral pres­i­den­tial de­crees were adopted along with a new re­vi­sion of the law on com­mod­ity ex­changes, over 50 res­o­lu­tions and de­ci­sions of the Coun­cil of Min­is­ters, the Na­tional Bank and other gov­ern­ment agen­cies, with dozens of lo­cal reg­u­la­tions of the com­mod­ity ex­change adopted.

In be­tween gen­eral meet­ings of share­hold­ers BUCE is man­aged by the Su­per­vi­sory Board chaired by the Be­laru­sian Trade Min­is­ter. The of­fi­cial is the gov­ern­ment’s rep­re­sen­ta­tive in the com­mod­ity ex­change. Fol­low­ing the rel­e­vant res­o­lu­tion of the Coun­cil of Min­is­ters, a Co­or­di­nat­ing Coun­cil for Ex­change Trade led by First Vice Premier of Be­larus Vladimir Se­mashko has been set up. The Coun­cil in­cludes heads of key min­istries of the repub­lic. It is worth not­ing that res­o­lu­tions of the Coun­cil have been bind­ing since Au­gust 2009 (they used to be rec­om­men­da­tions).

The Be­laru­sian Univer­sal Com­mod­ity Ex­change takes an ac­tive part in the work of in­ter­na­tional or­ga­ni­za­tions, con­tribut­ing to the ex­pan­sion of eco­nomic ties and ex­port of Be­laru­sian prod­ucts. In 2008 BUCE be­came mem­ber of the In­ter­na­tional As­so­ci­a­tion of CIS Ex­changes.

By the way, it was BUCE that sub­mit­ted the pro­posal to set up a Com­mit­tee for Com­mod­ity Mar­kets un­der the As­so­ci­a­tion. The pro­posal was backed by other ex­changes. In Novem­ber 2011, Minsk hosted the first ses­sion of the Com­mit­tee that de­ter­mines gen­eral guide­lines and con­crete mea­sures of the pro­gram to re­al­ize in­te­gra­tion pro­cesses at ex­change-fa­cil­i­tated com­mod­ity mar­kets of the CIS states, in­clud­ing the Cus­toms Union and EURASEC mem­ber states.

Be­sides, in 2011 BUCE be­came a full-fledged mem­ber of the As­so­ci­a­tion of Fu­ture Mar­kets

(AFM) that con­sists of clear­ing agen­cies and over 30 ex­changes from var­i­ous coun­tries.

At present BUCE has branches in all the oblast cap­i­tals of the coun­try, with a rep­re­sen­ta­tive of­fice in Moscow, Rus­sia. There are BUCE plenipo­ten­tiaries in Lithua­nia, Latvia, and South Africa (there are plans to set up rep­re­sen­ta­tive of­fices, daugh­ter en­ter­prises or joint ven­tures in these coun­tries in the fu­ture). The es­tab­lish­ment of ex­change bod­ies in Ukraine and Es­to­nia is on the agenda.

BUCE par­tic­i­pates in in­ter­na­tional and na­tional ex­pos (in­clud­ing events fea­tur­ing BUCE’S own booths that al­low vis­i­tors to watch trad­ing ses­sions in real time and make trans­ac­tions), fo­rums, con­fer­ences and other events.

With the as­sis­tance of the For­eign Min­istry BUCE reg­u­larly hosts sem­i­nars for am­bas­sadors and trade coun­cilors of Be­laru­sian em­bassies to at­tract new for­eign part­ners to the com­mod­ity ex­change. Ev­ery quar­ter of the year pre­sen­ta­tion ma­te­ri­als in Rus­sian and English and the Ex­change Bul­letin mag­a­zine (BUCE’S pro­pri­etary edi­tion) are sent to 50 diplo­matic mis­sions.

In­for­ma­tion tech­nolo­gies are vig­or­ously used. The of­fi­cial web­site www.butb.by was com­ple­mented by the monthly dig­i­tal edi­tion “Com­mod­ity ex­change mar­ket re­view” in 2011. The edi­tion fea­tures an­a­lyt­i­cal re­ports about the state and de­vel­op­ment fore­casts of com­mod­ity mar­kets, re­sults of trad­ing ses­sions, quo­ta­tions, and other kinds of top­i­cal in­for­ma­tion. Over 100 BUCE clients have sub­scribed to the edi­tion.

Many do­mes­tic and for­eign par­tic­i­pants of the com­mod­ity mar­ket be­lieve that at present the Be­laru­sian Univer­sal Com­mod­ity Ex­change is a ma­jor sup­plier of au­then­tic up-to-date and statis­tic in­for­ma­tion re­quired to make trade de­ci­sions as well as data about the sta­tus of var­i­ous seg­ments of the com­mod­ity mar­ket.

By the way, BUCE has started cal­cu­lat­ing mar­ket in­dexes, which are new in­te­grated in­di­ca­tors of the sta­tus of com­mod­ity mar­ket seg­ments, in par­tic­u­lar, fer­rous me­tal prod­ucts. The in­stru­ment is used by lead­ing in­ter­na­tional com­mod- ity ex­changes and al­lows as­sess­ing gen­eral mar­ket trends.

Fig­ures and Facts

Nowa­days the Be­laru­sian Univer­sal Com­mod­ity Ex­change ef­fi­ciently helps the gov­ern­ment or­ga­nize whole­sale trade in strate­gic prod­ucts; it par­tic­i­pates in sev­eral gov­ern­ment pro­grams aimed at de­vel­op­ing the na­tional econ­omy; it also pro­motes the in­te­gra­tion of mar­kets in Be­larus, the CIS states and Europe. Sev­eral re­spected for­eign ex­perts have de­clared BUCE a ma­jor op­er­a­tor of the com­mod­ity spot mar­ket that di­rectly in­flu­ences the mar­ket sit­u­a­tion, pri­mar­ily in the coun­tries Be­larus borders on.

The facts in­di­cate BUCE is a well-es­tab­lished eco­nomic in­sti­tu­tion. The con­clu­sion is con­firmed by the com­mod­ity ex­change per­for­mance. As of 1 Fe­bru­ary 2012, there were 9,822 reg­is­tered ex­change trade par­tic­i­pants and clients of ex­change bro­kers, in­clud­ing 2,081 non-res­i­dents in 55 coun­tries.

The three sec­tions (tim­ber, me­tal and agri­cul­tural prod­ucts) con­duct trad­ing ses­sions to sell 130 com­mod­ity items (over 30,000 ex­change com­modi­ties). The main ones are fer­rous and non-fer­rous met­als and goods made thereof, scrap me­tal and me­tal byprod­ucts, coal, coke, ca­bles and wires (the me­tal prod­ucts sec­tion), stand­ing tim­ber, round tim­ber, tim­ber, ply­wood and flake boards, pa­per and paste­board (the tim­ber prod­ucts sec­tion), hard cheese, milk pow­der, ca­sein, but­ter, rape­seed oil, sun­flower and soy oil cakes, hides (the agri­cul­tural prod­ucts sec­tion).

Ev­ery day BUCE hosts 5-7 trad­ing ses­sions. For in­stance, the most in­ten­sive trad­ing ses­sions to sell fer­rous met­als and goods made thereof in­volve about 700 sellers and buy­ers. The dig­i­tal sys­tem can process up to 100,000 bids at a time, with the de­mand ex­ceed­ing the sup­ply 10-15 times. It al­lows do­mes­tic con­sumers to feel con­fi­dent in the mar­ket seg­ment and to make prof­itable pur­chases.

BUCE’S to­tal turnover be­tween 2 June 2005 (the first trad­ing ses­sion) and 1 Fe­bru­ary 2012 ex­ceeded Br21.2 tril­lion, or the equiv­a­lent of about $7.2 bil­lion (tak­ing into ac­count the av­er­age ex­change rate of the Na­tional Bank of Be­larus in the rel­e­vant pe­ri­ods).

Cal­cu­lated as a sim­ple dif­fer­ence be­tween ini­tial prices and mar­ket prices (mi­nus the com­mod­ity ex­change fees), the ad­di­tional rev­enue and the money saved by Be­laru­sian par­tic­i­pants of the trad­ing ses­sions amounted to an equiv­a­lent of Br1.4 tril­lion be­tween 1 Jan­uary 2006 and 1 Fe­bru­ary 2012.

Steps for the Fu­ture

Along with hold­ing trad­ing ses­sions, pro­cess­ing data, han­dling trans­ac­tions, BUCE pays close

at­ten­tion to build­ing up the ex­change in­fra­struc­ture and in­tro­duc­ing new in­stru­ments and ser­vices. Adopted in 2010, the com­pany’s de­vel­op­ment pro­gram for 2011-2015 en­vis­ages the com­pany’s con­ver­sion into a hold­ing com­pany with a clearcut or­ga­nized com­mod­ity mar­ket in­fra­struc­ture.

The project Ex­change Lo­gis­tics the com­pany is im­ple­ment­ing now was the first ma­jor step in this di­rec­tion. Con­tracts with Be­laru­sian whole­sale traders, for­ward­ing agen­cies have al­ready been signed. Co­op­er­a­tion with com­pa­nies that ex­am­ine the qual­ity of com­modi­ties has been es­tab­lished. BUCE has also ac­cred­ited four ma­jor ware­houses abroad: in sea ports of Lithua­nia, Latvia, Es­to­nia and in Moscow. They will bring the traded com­modi­ties closer to for­eign buy­ers. In the fu­ture the ware­houses will en­able faster de­liv­er­ies us­ing sim­pler schemes. The mea­sures will im­prove the stand­ing and at­trac­tive­ness of BUCE’S guar­an­tees: the ac­cred­ited ware­houses will just have to con­firm the avail­abil­ity of the proper qual­ity and amount of com­modi­ties for trade par­tic­i­pants.

The reg­is­tra­tion of ware­houses in Europe, in par­tic­u­lar, in lo­ca­tions where tim­ber prod­ucts are trans­shipped at the Be­laru­sianPol­ish bor­der, will be the next step. In ad­di­tion to the above­men­tioned ad­van­tages the ware­houses will help re­duce the time spent wait­ing for Euro­pean track trains.

A while ago the ac­cred­ited ware­houses and for­ward­ing agen­cies set up a spe­cial lo­gis­tics or­ga­ni­za­tion which ser­vices al­low ex­pand­ing the ex­port of BUCE’S earn­ings, which is par­tic­u­larly im­por­tant for the na­tional econ­omy.

The cre­ation of the in­dus­trial and con­sumer goods sec­tion in 2009 is a suc­cess­ful project ac­com­plished by the com­mod­ity ex­change. In essence it has granted Be­laru­sian com­pa­nies ad­di­tional op­por­tu­ni­ties to sell do­mes­tic prod­ucts and to buy a wide choice of prod­ucts.

The sys­tem is un­par­al­leled in Be­larus and the CIS states. It re­lies on a mod­ern com­puter sys­tem that can ser­vice all Be­laru­sian eco­nomic en­ti­ties, in­clud­ing self-em­ployed busi­ness­men. In essence the in­dus­trial and con­sumer goods sec­tion is a 24/7 com­mod­ity dis­tri­bu­tion net­work ser­vic­ing any man­u­fac­turer with In­ter­net ac­cess. It can also be used to make pre­lim­i­nary re­quests to buy the nec­es­sary goods.

The trade in in­dus­trial and con­sumer prod­ucts saves a lot of gov­ern­ment funds. There­fore, the sys­tem is ac­tively used by, for in­stance, the Depart­ment for Ma­te­rial Re­serves of Be­larus, Be­laruskali, Minsk Au­to­mo­bile Plant, Minsk Mo­tor Plant, and other ma­jor com­pa­nies.

It should be noted that the es­tab­lish­ment of the new sec­tion was an es­sen­tial step in pop­u­lar­iz­ing and ex­pand­ing the use of dig­i­tal trade in the coun­try. In the fu­ture BUCE plans to set up a na­tional web por­tal for trade. It would be able to of­fer com­plete in­for­ma­tion about the man­u­fac­tur­ing po­ten­tial of do­mes­tic en­ter­prises, en­abling fast deals, in­clud­ing ex­port and im­port ones. For now Be­laru­sian com­pa­nies are reluc­tant to use the full po­ten­tial of the com­mod­ity ex­change de­spite the com­pany’s vig­or­ous pro­mo­tional ef­forts.

BUCE has an ef­fec­tive ar­bi­tra­tion com­mis­sion. Trade par­tic­i­pants say their dis­putes are han­dled at a high pro­fes­sional level and in many cases faster than by eco­nomic courts.

BUCE is now work­ing hard to form a for­ward mar­ket with­out gov­ern­ment funds and fi­nan­cial prof­its for it­self, at least ini­tially. The for­ward mar­ket will help im­prove Be­larus’ im­age and will in­di­cate the de­vel­op­ment of mar­ket re­la­tions in the coun­try. Wisely used, the for­ward mar­ket opens up great op­por­tu­ni­ties for in­sur­ing price risks and for plan­ning pro­duc­tion ef­forts.

Fol­low­ing the rel­e­vant res­o­lu­tion of the gov­ern­ment the Be­laru­sian Univer­sal Com­mod­ity Ex­change be­came an op­er­a­tor of the dig­i­tal trade plat­form used for gov­ern­ment pur­chases. The rel­e­vant lo­cal le­gal acts have been passed, soft­ware has been de­vel­oped, a pro­pri­etary au­then­ti­cat­ing cen­ter has been set up. Free ed­u­ca­tional cour­ses are now avail­able in Minsk and in the oblast cap­i­tals (at premises of BUCE branches), with about 5,000 ex­ec­u­tives and spe­cial­ists in­structed in us­ing the dig­i­tal trade plat­form for gov­ern­ment pur­chases.

The first re­sults of the dig­i­tal auc­tions held for gov­ern­ment pur­chases were rather vivid. The or­ga­ni­za­tions that used the sys­tem saved be­tween 18% and 47% of their money thanks to the re­duced ini­tial prices. As of 1 Fe­bru­ary 2012, buy­ers had saved over Br1 bil­lion in all the com­pleted dig­i­tal auc­tions (for which con­tracts had been signed).

The Buce-fa­cil­i­tated dig­i­tal trade plat­form can be used for pur­chases us­ing not only gov­ern­ment funds but also pro­pri­etary funds. Since the auc­tions be­came avail­able, Br1.3 bil­lion worth of

pur­chase con­tracts us­ing gov­ern­ment funds have been signed, with Br5.3 bil­lion worth of pur­chase con­tracts us­ing pro­pri­etary funds signed. The most ac­tive par­tic­i­pants are or­ga­ni­za­tions re­port­ing to the Be­laru­sian Health­care Min­istry.

Mat­ters of Dis­pute

The unique ca­pa­bil­i­ties BUCE of­fers – flex­i­bil­ity, prompt re­sponse and ease of use – have al­lowed the com­pany to quite rapidly se­cure a firm foothold on the do­mes­tic mar­ket and for­eign ones. The at­ti­tude of mar­ket par­tic­i­pants, eco­nomic en­ti­ties, and top ex­ec­u­tives to BUCE has changed.

Still eco­nomic op­er­a­tors tend to be­lieve that the com­mod­ity ex­change is a mid­dle­man bent on earn­ing prof­its. How­ever, BUCE does not re­sell any­thing but en­ables con­di­tions for ef­fec­tive op­er­a­tion of mar­ket par­tic­i­pants.

The er­ro­neous opin­ion comes from the lack of un­der­stand­ing of how com­mod­ity ex­changes work. The Be­laru­sian Univer­sal Com­mod­ity Ex­change op­er­ates un­der the con­trol of and for the sake of the gov­ern­ment just like ex­changes in other coun­tries do. In the USA, the UK, Ger­many, Poland, Uzbek­istan, and Rus­sia the com­mod­ity ex­change is used as a real mech­a­nism to man­age and in­flu­ence trade, pri­mar­ily for­eign trade trans­ac­tions.

For in­stance, the USA has the Com­mod­ity Fu­tures Trad­ing Com­mis­sion. Its mem­bers and the chair­man are ap­pointed by the pres­i­dent and have con­sid­er­able power, in­clud­ing power to “tune” mar­ket pro­cesses.

In Poland the gov­ern­ment does not leg­isla­tively spec­ify the com­modi­ties that have to be sold via the com­mod­ity ex­change. How­ever, pref­er­ences are granted only to man­u­fac­tur­ers who can con­firm that their prod­ucts are sold via the ex­change.

Ev­ery year Uzbek­istan de­ter­mines the quota of com­modi­ties to be sold via the na­tional com­mod­ity ex­change.

Ac­cord­ing to Turk­menistan’s gov­ern­ment, not even a nee­dle can be ex­ported from the coun­try with­out a deal get­ting reg­is­tered by the com­mod­ity ex­change. By the way, in his time Pres­i­dent of Be­larus Alexan­der Lukashenko no­ticed this com­mod­ity ex­change and gave the rel­e­vant in­struc­tion to set up a sim­i­lar body in Be­larus.

Cer­tainly, blind copy­ing of ex­change-fa­cil­i­tated trade prac­tices is out of the ques­tion. These ex­am­ples vividly demon­strate that the com­mod­ity ex­change is a truly in­dis­pens­able eco­nomic in­sti­tu­tion for any coun­try. We would like to dis­cuss the prob­lems BUCE has been fac­ing re­cently and which res­o­lu­tion would make the fi­nan­cial and eco­nomic sta­tus of the coun­try stronger tak­ing into ac­count state in­ter­ests.

Let’s start with the me­tal prod­ucts sec­tion. The share of ex­change­fa­cil­i­tated op­er­a­tions in­volv­ing the fer­rous met­als and goods made thereof, which are to be sold via the ex­change, in­creased from 2% in 2005 to 20% in 2010. The growth is large but is it suf­fi­cient?

Buy­ing me­tal in small batches is a prob­lem be­cause it is not ef­fec­tive. Ex­change bro­kers, first of all, in­dus­try ones could con­sol­i­date pur­chases and buy large batches, for in­stance, wagon lots at lower prices. We would also like to en­cour­age the en­ter­prises that buy me­tal prod­ucts us­ing the gov­ern­ment pur­chases sys­tem among other ways, to use the ex­change. It would al­low them and the state bud­get to achieve a con­sid­er­able eco­nomic ef­fect.

The same is true for the com­par­a­tively new items on sale – ca­bles, wires, and elec­tri­cal prod­ucts. The cus­tomers are mainly en­ter­prises of the En­ergy Min­istry. Un­til re­cently they used BUCE to rather ef­fec­tively pur­chase what they needed. How­ever, the state

elec­tri­cal com­pany Be­len­ergo is­sued or­der No. 275 of 17 Au­gust 2011 to make its con­stituent en­ter­prises to use OAO Be­len­er­gosnabkom­plekt for these pur­chases. While dif­fer­ent forms of pur­chases are eco­nom­i­cally vi­tal, pur­chases via the com­mod­ity ex­change are un­doubt­edly ef­fec­tive.

There are prob­lems in the agri­cul­tural prod­ucts sec­tion, too. For in­stance, un­til re­cently in­struc­tions is­sued by the work­ing group for mon­i­tor­ing dairy, grain, and flour sales on the home and for­eign mar­kets (a body of the Agri­cul­ture and Food Min­istry) were ap­pli­ca­ble to BUCE as well. But in a mar­ket econ­omy only de­mand and sup­ply can pro­duce an ob­jec­tive bal­anced price and pull agri­cul­tural sales out of the shadow econ­omy. Oth­er­wise, the in­dica­tive prices for­mu­lated by the work­ing group have no real eco­nomic ba­sis.

How­ever, an ex­change is ef­fec­tive be­cause the most rep­re­sen­ta­tive price is de­ter­mined by the con­flict of con­cen­trated lev­els of sup­ply and de­mand. It is pos­si­ble only at the com­mod­ity ex­change. Op­er­a­tive and reg­u­lar ex­change quotes are the pri­mary source here. They should be used to es­tab­lish prices for sim­i­lar prod­ucts sold off the ex­change. The en­force­ment of min­i­mal prices con­tra­dicts the logic of ex­change trade. It has been men­tioned re­peat­edly.

If these rules are bro­ken, we will get the sit­u­a­tion we saw ear­lier. While BUCE of­fered dairy prod­ucts at rec­om­mended prices on con­di­tions of 100% up­front pay­ment and FCA de­liv­ery (seller’s ware­house), the over-the-counter mar­ket of­fered dairy prod­ucts at the same prices, with de­lay of pay­ment, de­liv­ery to the bor­der or to the buyer.

How­ever, we came to terms with the Agri­cul­ture and Food Min­istry and for­warded a co­or­di­nated pro­posal to the gov­ern­ment. On 26 Jan­uary 2012, Prime Min­is­ter of Be­larus Mikhail Myas­nikovich signed Or­di­nance No. 30p to ad­dress the sit­u­a­tion. Although it is too early to talk about re­sults, we are con­vinced it will help raise dairy ex­ports via the ex­change, mak­ing them more eco­nom­i­cally ef­fec­tive and restor­ing mar­ket di­ver­si­fi­ca­tion.

BUCE’S pro­pos­als to sell new items are hard to im­ple­ment, although the items fully meet the clas­si­cal ex­change com­mod­ity item de­scrip­tion: they are fast-mov­ing, ho­mo­ge­neous, and re­place­able. For in­stance, sugar and salt. All over the world these com­modi­ties are traded via the stock ex­change, but the sit­u­a­tion in Be­larus is dif­fer­ent. For two years BUCE has been try­ing to come up with a so­lu­tion to suit the Be­laru­sian state food in­dus­try con­cern Bel­go­spis­che­p­rom but to no avail.

As a re­sult, this im­por­tant mar­ket seg­ment re­mains semi-trans­par­ent due to, for in­stance, sugar sale of­fers that for­bid ex­port of sugar to Rus­sia, Kaza­khstan, Ukraine, Kyr­gyzs­tan, and Ge­or­gia. Ev­ery year these coun­tries get over 80% of sugar ex­port. It is Rus­sian, Kazakh, and Ukrainian cus­tomers that reg­u­larly place of­fers to buy Be­laru­sian sugar.

The tim­ber prod­ucts sec­tion. It should be noted that BUCE en­joys best un­der­stand­ing with the Be­laru­sian Forestry Min­istry and the state forestry in­dus­try con­cern Belles­bumprom. Co­op­er­a­tion is smooth but there are things to im­prove. For in­stance, af­ter as­sess­ing the de­mand (trans­ac­tions are pre­ceded by the col­lec­tion of of­fers to buy com­modi­ties) the main sup­pli­ers, like Belle­sex­port, Belles­bumprom­ex­port, the Be­larus Pres­i­dent Prop­erty Man­age­ment Depart­ment some­times of­fer to sell prod­ucts way above the de­mand, thus com­pet­ing with each other and cre­at­ing pre­req­ui­sites for lower prices. The ap­proach is not ex­actly cor­rect and should be fixed.

All in all, those who are against us­ing BUCE to sell prod­ucts gen­er­ally say they use their own dis­tri­bu­tion chains. But BUCE could be a com­ple­men­tary tool! The com­mod­ity ex­change is an ad­di­tional way to sell prod­ucts and learn the true value of a prod­uct. It should be un­der­stood that with its client base in 55 coun­tries BUCE is a com­mod­ity dis­tri­bu­tion chain with ob­vi­ous ad­van­tages. Be­sides, tech­ni­cal ca­pa­bil­i­ties of the com­mod­ity ex­change ex­ceed those of some trad­ing houses many times over.

Ex­change-fa­cil­i­tated trans­ac­tions are a mech­a­nism to de­ter­mine a fair mar­ket price that sellers and buy­ers in the OTC mar­ket can and should keep in mind. The in­stru­ment is in­dis­pens­able for in­di­vid­ual eco­nomic en­ti­ties and the en­tire Be­laru­sian ex­port-ori­ented econ­omy.

BUCE per­for­mance demon­strates that with proper le­gal and ad­min­is­tra­tive sup­port com­mod­ity ex­change op­er­a­tions can give a con­sid­er­able eco­nomic ef­fect to the state. It is man­i­fested in fi­nan­cial re­sults of Be­laru­sian eco­nomic en­ti­ties that use the ex­change to sell and buy prod­ucts. Not only the com­mod­ity ex­change and the gov­ern­ment bod­ies that con­trol it but all eco­nomic en­ti­ties should bol­ster the ef­fect.

Ev­ery day BUCE holds 5-7 trad­ing ses­sions in­volv­ing up to 700 sellers and buy­ers

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