Russian Grain Exporters Union sees trading on BRICS commodity exchange topping $1 trln in future
MOSCOW. Oct 24 (Interfax) - Trading of agricultural and related products on a BRICS commodity exchange could exceed $1 trillion in future, the CEO of Russia's Grain Exporters Union, Eduard Zernin said, commenting on the Kazan Declaration passed at the BRICS summit, which welcomes a Russian initiative to create a BRICS grain exchange and its subsequent development to eventually include other agricultural commodities.
The BRICS grain exchange could eventually become a full-fledged commodity exchange, President Vladimir Putin said at the summit. "In due time, we could also think of transforming this grain exchange into a full-fledged commodity exchange," Putin said.
"Considering the potential for expanding the assortment of traded agricultural and related products, trading volume on the exchange could exceed $1 trillion, which would make it one of the largest markets for agricultural products in the world and a serious factor in strengthening BRICS influence in the area of global food security," Zernin told Interfax.
He said the approval of the proposal to create the exchange by the leaders of BRICS countries is one of the main steps toward its creation. "Now it is possible to begin the practical implementation of the project. This will require substantial organizational efforts, not only from agricultural agencies, but also, foremost, from the financial authorities of BRICS countries, since exchanges, including commodity ones, are in their area of responsibility," Zernin said.
"Based on the experience of creating the New Development Bank, the organizational process could take several years, during which designated representatives of the organization's countries will have to work out the legal and founding documents and parties' contributions, concurrently working on the trading and clearing technology," Zernin said.
"Right now one thing is clear, the grain exchange must have international status, which will make it possible to protect trade of staple foods from the sanctions blackmail and manipulation of third countries," he said.
"Organized trading on the BRICS exchange will make it possible to ensure the sale and acquisition of staple agricultural and related products - mineral fertilizer, water resources, carbon units and so on - according to transparent rules, and nondiscriminatory access of all BRICS countries on equal terms, as well as establish accurate price indicators for the whole assortment of traded products. The estimated size of the spot market for grain crops alone is about $90 billion per year in current world prices, not including derivatives, the trading volume of which can be far greater," Zernin said.